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Revenue Ruling 72-186

Rev. Rul. 72-186 1972-1 C.B. 341

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Headnote

A manufacturer’s “lowest established wholesale price” for an article used by him, and also regularly sold at wholesale, is the lowest established f.o.b. factory wholesale price at the time of the article’s first taxable use.

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LAW AND ANALYSIS

Section 48.4218-5(b) of the Manufacturers and Retailers Excise Tax Regulations provides rules for determining the tax base for computing an ad valorem manufacturers excise tax under section 4218 of the Internal Revenue Code of 1954 on use of a taxable article. The regulations section provides that if the manufacturer, producer, or importer regularly sells such articles at wholesale in arm’s length transactions, tax on his use of any such article shall be computed on his “lowest established wholesale price” for such articles in effect at the time of the taxable use.

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HOLDING

Held, for purposes of section 48.4218-5(b) of the regulations, in those situations where a manufacturer, producer, or importer of an article has an established f.o.b. factory wholesale price for the article, the manufacturer’s, producer’s, or importer’s “lowest established wholesale price” for the article is his lowest established f.o.b. factory wholesale price in effect at the time of the article’s first taxable use.