Rev. Rul. 82-7 1982-1 C.B. 167, 1982-1 I.R.B. 17.

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Revenue Ruling 82-7

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Headnote

Leased trucks; sold in U.S. after use overseas. The tax imposed by section 4061 of the Code applies to the manufacturer’s sale to a dealer of trucks that, when new, had been leased by the manufacturer to a U.S. agency for use in a foreign country. Rev. Rul. 56-375 superseded. Rev. Rul. 81-97 distinguished.

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ISSUE

Does the manufacturers excise tax imposed by section 4061(a)(1) of the Internal Revenue Code apply under the circumstances described below?

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FACTS

A truck manufacturer, regularly engaged in selling its trucks in arm’s length transactions, shipped new trucks to a foreign country for delivery under lease to a United States agency operating in a foreign country. The agency used the trucks in the foreign country during the period of the lease. Upon expiration of the lease, the manufacturer disposed of some of the trucks in the foreign country, and returned the others to the United States and sold them to an unrelated dealer.

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LAW AND ANALYSIS

Section 4061(a) of the Code imposes a tax on the sale by the manufacturer, producer, or importer of certain enumerated articles, including automobile truck chassis and bodies. Section 4217(a) of the Code provides that for purposes of the manufacturers excise taxes imposed under chapter 32 (which includes section 4061), the lease of an article (including any renewal or any extension of a lease or any subsequent lease of such article) by the manufacturer, producer, or importer is considered to be a sale of such article. Section 4217(d)(2) provides rules for determining the amount of tax payable upon the sale of an article by the manufacturer where the manufacturer has previously leased such article under a taxable lease. Section 4221(a)(2) of the Code provides that no manufacturers excise tax will be imposed on the sale by the manufacturer of an article for export. Rev. Rul. 56-375, 1956-2 C.B. 818, holds, under prior law, that the manufacturers excise tax does not apply to payments received by a manufacturer for the lease of articles to a United States agency operating in a foreign country provided the articles remained in a foreign country during the period of the lease and are disposed of in a foreign country on expiration of the lease. Rev. Rul. 81-97, 1981-1 [C.B. 498], holds that an importer’s sale of taxable articles previously sold tax free for export and exported are not subject to manufacturers excise tax where the articles are used prior to being returned to the United States. Rev. Rul. 80-256, 1980-2 C.B. 308, holds that the tax imposed by section 4061(a)(1) of the Code applies to a manufacturer’s retail sale of a truck that when new had been leased to a school under a lease that is not taxable by reason of the exemption provided by section 4221(a)(5). The language of section 4217(d) indicates that a lease of an article does not insulate a later sale of such article from manufacturers excise tax because that section provides rules for determining the amount of tax due upon a sale of an article following a taxable lease of such article. Under Rev. Rul. 80-256, the fact that the lease that occurred prior to the sale is an exempt lease does not remove the sale from the scope of sections 4061(a)(1) and 4217. The payments received by the manufacturer for the lease of the trucks are not subject to the tax under section 4061(a)(1) of the Code by reason of the exemptions provided by section 4221(a)(2). However, unlike the sale of a used article that was previously sold tax-free, the tax-free lease of an article would not insulate its later sale from tax.

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HOLDING

The tax imposed by section 4061(a)(1) of the Code applies to the manufacturer’s sale of the used trucks to the dealer. The basis for computing the tax is the actual selling price to the dealer.

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EFFECT ON OTHER REVENUE RULINGS

Rev. Rul. 56-375 is superseded. Rev. Rul. 81-97 is distinguished.