§53.96. Constructive sale price; special rule for arm's-length sales. — Inbound Citations

(i) Arm's-length sales at retail or on consignment, other than those sales at retail and to retailers to which section 4216(b)(2) of the Code and § 53.96 apply; and

(b) Section 4216(b)(1)(A) of the Code relates to the determination of a constructive sale price for sales of taxable articles sold at arm's-length and at retail. In the case of such sales, the constructive sale price is the highest price for which such articles are sold to wholesale distributors, in the ordinary course of trade, by manufacturers or producers thereof, as determined by the Secretary. If the constructive sale price is less than the actual sale price, the constructive sale price shall be used as the tax base. If the constructive sale price is not less than the actual sale price, the actual sale price shall be considered as not less than fair market, and shall be used as the tax base. In determining the highest price for which articles are sold by manufacturers to wholesale distributors, there must be taken into consideration the normal industry practices with respect to inclusions and exclusions under section 4216(a) of the Code. However, once a constructive sale price has been determined by the Secretary, no further adjustment of such price shall be made. The provisions of section 4216(b)(1)(A) of the Code and this paragraph shall not apply in those instances where the provisions of section 4216(b)(2) of the Code and § 53.96 apply.

(f) For purposes of this section and paragraphs (3) and (4) of section 4216(b) of the Code, the term “regularly sells” has the same meaning as that accorded the term “regular sales” in § 53.96(b)(3), and the term “normal method of sales in the industry” has the same meaning as accorded that term in § 53.96(b)(4).

(f) For purposes of this section and paragraphs (3) and (4) of section 4216(b) of the Code, the term “regularly sells” has the same meaning as that accorded the term “regular sales” in § 53.96(b)(3), and the term “normal method of sales in the industry” has the same meaning as accorded that term in § 53.96(b)(4).