SEC. 4216-Continued (d) (added 1955)-Continued "(1) upon the initial lease a tax at the applicable rate specified in section 4061(a) based upon the fair market value on the date of such lease, or "(2) upon each lease payment with respect to such trailer or semitrailer, a percentage of such payment equal to the rate of tax which would be imposed upon the sale of such trailer or semitrailer, until the total of the tax payments under such lease and any prior lease equals the total tax. In any case where a trailer or semitrailer which has been leased is sold before the total tax has been paid, the tax payable on such sale shall be the difference between the tax paid on the lease payments and the total tax. For purposes of this paragraph, the term 'total tax' means the tax computed, at the rate in effect on the date of the initial lease, on the fair market value on the date of such lease. However, in the case where a trailer or semitrailer which has been leased is sold before the total tax has been paid, the total tax shall not exceed a tax computed, at the rate in effect on the date of the initial lease, on the amount received on such sale (determined without regard to section 4216(b)) plus the total of the payments received by the lessor under any lease of such trailer or semitrailer." Effective Date: September 1, 1955-the first day of the first month beginning more than 10 days after the date of enactment (August 9, 1955). (Id., § 4, 69 Stat. 614.)497 Applicability: "In the application of section 4216(d) of the Internal Revenue Code of 1954 (as added by this Act) to any article which has been leased before the effective date specified in the preceding sentence, under regulations prescribed by the Secretary of the Treasury or his delegate "(1) the fair market value of such article shall be the fair market value determined as of such effective date; "(2) only payments under a lease received on or after such effective date shall be considered in determining when the total tax (as defined in such section 4216(d)) has been paid; "(3) any lease existing on such effective date, or if there is none, the first lease entered into after such effective date, shall be considered an initial lease (except that fair market value shall be determined as provided in paragraph (1) of this sentence); and "(4) any lease existing on such effective date shall be considered as having been entered into on such date." (Id., § 4, 2d sentence, 69 Stat. 614.) 497 Section 4 of P.L. 84-317 provided in part as follows: "The amendments made by subsection (a) shall take effect on the first day of the first month which begins more than 10 days after the date of enactment of this Act." This language was in section 4 of the bill (H.R. 3437) as introduced February 2, 1955, as amended and reported July 20, and as passed by both Houses. (Cong. Rec., 84th Congress, 1st Session, pp. 1091, 11099, 11149, 11206, 11453, 11805). At no stage did any of the four sections contain a "subsection (a)". The statute itself is therefore somewhat obscure in this respect; but the intent to apply the effective date specified in section 4 to each of the amendments made by the Act is indicated by the Committee reports. House Report No. 1290, July 20, 1955, p. 3, which was adopted by the Senate (S. Rep. No. 1144), stated that "This bill is to be effective on the first day of the first month beginning more than 10 days after the date of its enactment." SEC. 4216-Continued (d)-Continued Do..... (e). (e) (1). (in part) Sept. 2, 1958, H.R. 7125, P.L. 85-859, § 117(b). 72 Stat. 1281: Repealed subsection (d) of Sec. 4216 (as added by P.L. 84-317, § 2). Effective Date: January 1, 1959-the first day of the first calendar quarter beginning more than 60 days after the date of enactment (September 2, 1958). (Id., § 1(c), 72 Stat. 1275. See n. 445, p. 671 above.) Applicability: "The amendments made by subsections (a) [amending Sec. 4217] and (b) [this amendment and amendment of Sec. 4216(c) (1)] shall not apply to any lease of an article if section 4216(d) of the Internal Revenue Code of 1954 applied to any lease of such article before the effective date [January 1, 1959] specified in section 1(c) of this Act." (Id., § 117(c), 72 Stat. 1281.) Sept. 2, 1958, H.R. 7125, P.L. 85-859 § 116, 72 Stat. 1280: Amended Sec. 4216 by adding at the end thereof, after subsection (c) (subsection (d) having been repealed), the following new subsection (e): "(e) SALES OF INSTALLMENT ACCOUNTS.-If installment accounts, with respect to payments on which tax is being computed as provided in subsection (c), are sold or otherwise disposed of, then subsection (c) shall not apply with respect to any subsequent payments on such accounts (other than subsequent payments on returned accounts with respect to which credit or refund is allowable by reason of section 6416 (b) (5)), but instead "(1) there shall be paid an amount equal to the difference between (A) the tax previously paid on the payments on such installment accounts, and (B) the total tax; except that "(2) if any such sale is pursuant to the order of, or subject to the approval of, a court of competent jurisdiction in a bankruptcy or insolvency proceeding, the amount computed under paragraph (1) shall not exceed the amount computed by multiplying (A) the amount for which such accounts are sold, by (B) the rate of tax under this chapter which applied on the day on which the transaction giving rise to such installment accounts took place. The sum of the amounts payable under this subsection and subsection (c) in respect of the sale of any article shall not exceed the total tax." Effective Date: January 1, 1959-the first day of the first calendar quarter beginning more than 60 days after the date of enactment (September 2, 1958). (Id., § 1 (c), 72 Stat. 1275. See n. 445, p. 671 above.) June 21, 1965, H.R. 8371, P.L. 89-44, § 207(b) (1), 79 Stat. 140: Amended Sec. 4216(e) (1) (as added by P.L. 85-859, § 116) by striking out "total tax" and inserting in lieu thereof― "total tax which would be payable if such installment accounts had not been sold or otherwise disposed of (computed as provided in subsection (c));". Effective Date: June 22, 1965-the day after the date of enactment (June 21, 1965.) (Id., § 701(a)(2), 79 Stat. 155. See n. 443, p. 670 above.) SEC. 4216-Continued (e) (2) (f) _ June 21 1965, H.R. 8371, P.L. 89-44, § 207(b) (2), 79 Stat. 140: Amended Sec. 4216(e)(2) (as added by P.L. 85-859, § 116) to read as follows: "(2) if any such sale is pursuant to the order of, or subject to the approval of, a court of competent jurisdiction in a bankruptcy or insolvency proceeding, the amount computed under paragraph (1) shall not exceed the sum of the amounts computed by multiplying (A) the proportionate share of the amount for which such accounts are sold which is allocable to each unpaid installment payment by (B) the rate of tax under this chapter in effect on the date such unpaid installment payment is or was due." Effective Date: June 22, 1965-the day after the date of enactment (June 21, 1965). (Id., § 701(a)(2), 79 Stat. 155. See n. 443, p. 670 above.) Sept. 14, 1960, H.R. 12536, P.L. 86-781, § [1], 74 Stat. 1017: Amended Sec. 4216 by adding at the end thereof, after subsection (e) (as added by P.L. 85-859, § 116), the following new subsection (f): "(f) EXCLUSION OF LOCAL ADVERTISING CHARGE FROM SALE PRICE. "(1) EXCLUSION.-In determining, for purposes of this chapter, the price for which an article is sold, there shall be excluded a charge for local advertising (as defined in paragraph (4)) to the extent that such charge (A) does not exceed 5 percent of the price for which the article is sold (as determined under this section by excluding any charge for local advertising), "(B) is a separate charge made when the article is sold, and "(C) is intended to be refunded to the purchaser or any subsequent vendee in reimbursement of costs incurred for local advertising. In the case of any such charge (or portion thereof) which is not so refunded before the first day of the fifth calendar month following the calendar year during which the article was sold, the exclusion provided by the preceding sentence shall cease to apply as of such first day. "(2) AGGREGATE AMOUNT WHICH MAY BE EXCLUDED.-In the case of articles upon the sale of which tax was imposed under the same section of this chapter "(A) The sum of (i) the aggregate of the charges for local advertising excluded under paragraph (1), plus (ii) the aggregate of the readjustments for local advertising under section 6416(b)(1) (relating to credits or refunds for price readjust ments), shall not exceed "(B) 5 percent of the aggregate of the prices (determined under this section by excluding all charges for local advertising) at which such articles were sold in sales on which tax was imposed by such section of this chapter. The preceding sentence shall be applied to each manufacturer, producer, and importer as of the close of each calendar quarter, taking into account the items specified in subparagraphs (A) and (B) for such calendar quarter and preceding calendar quarters in the same calendar year. "(3) NO ADJUSTMENTS FOR OTHER ADVERTISING CHARGES. Except to the extent provided by paragraphs (1) and (2), no charge or expenditure for advertising shall serve, for purposes of SEC. 4216-Continued (f) (added 1960)-Continued (f) (4) (C)............ (in part) (g). this section or section 6416 (b)(1), as the basis for an exclusion from, or as a readjustment of, the price of any article. "(4) LOCAL ADVERTISING DEFINED. For purposes of this section and section 6416(b)(1), the term 'local advertising' means only advertising which "(A) is initiated or obtained by the purchaser or any subsequent vendee, "(B) names the article for which the price is determinable under this section and states the location at which such article may be purchased at retail, and (C) is broadcast over a radio station or television station or appears in a newspaper." Applicability: Articles sold on or after January 1, 1961-the first day of the first calendar quarter beginning more than 20 days after the date of enactment (September 14, 1960). (Id., § 3, 74 Stat. 1018.) Oct. 9, 1962, H.R. 6682, P.L. 87–770, § 2(a), 76 Stat. 768: Amended Sec. 4216(f) (4) (C) (as added by P.L. 86-781, § 1) by striking out "or appears in a newspaper" and inserting in lieu thereof appears in a newspaper or magazine, or is displayed by means of an outdoor advertising sign or poster". Applicability: With respect to articles sold on or after January 1, 1963—“the first day of the first calendar quarter beginning more than 20 days after the date of the enactment of this Act [October 9, 1962]". (Id., § 2(b), 76 Stat. 768.) June 21, 1965, H.R. 8371, P.L. 89-44, § 801(b), 79 Stat. 158: Amended Sec. 4216 (relating to definition of price for purposes of manufacturers excise taxes) by adding at the end thereof the following new subsection (g): "(g) CERTAIN TRUCKS INCORPORATING USED COMPONENTS.For purposes of the tax imposed by section 4061(a)(1) (relating to trucks, buses, etc.), in determining the price for which an article is sold, the value of any component of such article shall be excluded from the price, if "(1) such component is furnished by the first user of such article, and "(2) such component has been used prior to such furnishing." Applicability: With respect to articles sold on or after June 22, 1965-the day after the date of enactment (June 21, 1965). (Id., § 801(e), 79 Stat. 158.) SEC. 4217. LEASE CONSIDERED AS SALE (68A Stat. 494): Sen'ce added Aug. 9, 1955, H.R. 3437, P.L. 84-317, § 3, 69 Stat. 614: Amended Sec. 4217 498 (relating to certain leases considered as sales 498 Section 4217 originally read as follows (68A Stat. 494): "SEC. 4217. LEASE CONSIDERED AS SALE. "For the purposes of this chapter, 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 shall be considered a taxable sale of such article." SEC. 4217 (amended 1955)—Continued In full....... for purposes of manufacturers excise taxes) by adding at the end thereof the following new sentence: "This section shall not apply to the lease of an article upon which the tax has been paid in the manner provided in section 4216(d) (1) or the total tax has been paid in the manner provided in section 4216(d)(2)." Effective Date: September 1, 1955. (Id., § 4, 69 Stat. 614. See n. 497, p. 719 above.) Sept. 2, 1958, H.R. 7125, P.L. 85-859, § 117(a), 72 Stat. 1280: Amended Sec. 4217 (as amended by P.L. 84-317, § 3) to read as follows: "SEC. 4217. LEASES. "(a) LEASE CONSIDERED AS SALE. For purposes of this chapter, 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 shall be considered a sale of such article. "(b) LIMITATION ON TAX.-In the case of any lease described in subsection (a) of an article taxable under this chapter, if the tax under this chapter is based on the price for which such articles are sold, there shall be paid on each lease payment with respect to such article a percentage of such payment equal to the rate of tax in effect on the date of such payment, until the total of the tax payments under such lease and any prior lease to which this subsection applies equals the total tax. "(c) DEFINITION OF TOTAL TAX.-For purposes of this section the term 'total tax' means "(1) except as provided in paragraph (2), the tax computed on the constructive sale price for such article which would be determined under section 4216(b) if such article were sold at retail on the date of the first lease to which subsection (b) applies; or "(2) if the first lease to which subsection (b) applies is not the first lease of the article, the tax computed on the fair market value of such article on the date of the first lease to which subsection (b) applies. Any such computation of tax shall be made at the applicable rate specified in this chapter in effect on the date of the first lease to which subsection (b) applies. "(d) SPECIAL RULES. "(1) LESSOR MUST ALSO BE ENGAGED IN SELLING.-Subsection (b) shall not apply to any lease of an article unless at the time of making the lease, or any prior lease of such article to which subsection (b) applies, the person making the lease or prior lease was elso engaged in the business of selling in arm's length transactions the same type and model of article. "(2) SALE BEFORE TOTAL TAX BECOMES PAYABLE.-If the taxpayer sells an article before the total tax has become payable, then the tax payable on such sale shall be whichever of the following is the smaller: "(A) the difference between (i) the tax imposed on lease payments under leases of such article to which subsection (b) applies, and (ii) the total tax, or "(B) a tax computed, at the rate in effect on the date of the sale, on the price for which the article is sold. |