---
kind: "section"
citation: "27 C.F.R. § 26.77"
title: "27"
number: "26.77"
heading: "Subject to tax."
url: "https://uscodex.org/cfr/27/26.77"
---

# §26.77. Subject to tax.

- (a) Distilled spirits of Puerto Rican manufacture, and any products containing such distilled spirits, brought into the United States and withdrawn for consumption or sale are subject to a tax equal to the tax imposed in the United States by [26 U.S.C. 5001](/usc/26/5001.md).
- (b) A credit against the tax imposed on distilled spirits by [26 U.S.C. 7652](/usc/26/7652.md) is allowable under [26 U.S.C. 5010](/usc/26/5010.md) on each proof gallon of alcohol derived from eligible wine or from eligible flavors which do not exceed 2 1/2 percent of the finished product on a proof gallon basis. The credit is allowable at the time the tax is payable as if it constituted a reduction in the rate of tax.
- (c) Where credit against the tax is desired, the person liable for the tax shall establish an effective tax rate in accordance with [§ 26.79a](/cfr/27/26.79a.md). The effective tax rate established will be applied to each withdrawal or other disposition of the distilled spirits for consumption or sale within the United States.

## Notes

### Amendments

[T.D. ATF-297, 55 FR 18066, Apr. 30, 1990. Redesignated and amended by T.D. ATF-459, 66 FR 38550, 38551, July 25, 2001]

### Source

Source: T.D. 6551, 26 FR 1490, Feb. 22, 1961, unless otherwise noted. Redesignated at 40 FR 16835, Apr. 15, 1975.

### Authority

Authority: 19 U.S.C. 81c; 26 U.S.C. 5001, 5007, 5008, 5010, 5041, 5051, 5061, 5111-5114, 5121, 5122-5124, 5131-5132, 5207, 5232, 5271, 5275, 5301, 5314, 5555, 6001, 6038E, 6065, 6109, 6301, 6302, 6804, 7101, 7102, 7651, 7652, 7805; 27 U.S.C. 203, 205; 31 U.S.C. 9301, 9303, 9304, 9306.

### Source

Source: 20 FR 6077, Aug. 20, 1955, unless otherwise noted. Redesignated at 40 FR 16835, Apr. 15, 1975, and further redesignated by T.D. ATF-459, 66 FR 38550, July 25, 2001.

### Amendments

[T.D. ATF-297, 55 FR 18066, Apr. 30, 1990. Redesignated and amended by T.D. ATF-459, 66 FR 38550, 38551, July 25, 2001]