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Taxable Years
Beginning in 1943

cost of such articles plus (B) the average margin with respect to the quantity involved; or

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cost of such articles plus (B) the cost of such articles plus (B) the
average margin with respect to average margin with respect to
the quantity involved; or
the quantity involved; or

Sec. 700. (e) (2) If the taxpayer

Sec. 700. (e) (2) If the taxpayer

Sec. 700. (e) (2) If the taxpayer so elects by filing his return on so elects by filing his return on so elects by filing his return on such basis, from the aggregate such basis, from the aggregate such basis, from the aggregate selling price of all articles with selling price of all articles with selling price of all articles with respect to which such Federal ex- respect to which such Federal ex- respect to which such Federal excise tax was imposed and which cise tax was imposed and which cise tax was imposed and which were sold by him during the tax- were sold by him during the tax- were sold by him during the taxable year (computed without able year (computed without able year without (computed deduction of reimbursement to deduction of reimbursement to deduction of reimbursement to purchasers with respect to such purchasers with respect to such purchasers with respect to such Federal excise tax) there shall be Federal excise tax) there shall be Federal excise tax) there shall be deducted the aggregate cost of such deducted the aggregate cost of such deducted the aggregate cost of such articles, and the difference shall articles, and the difference shall articles, and the difference shall be reduced to a margin per unit be reduced to a margin per unit be reduced to a margin per unit in terms of the basis on which the in terms of the basis on which the in terms of the basis on which the Federal excise tax was imposed. Federal excise tax was imposed. Federal excise tax was imposed. The excess of such margin per The excess of such margin per The excess of such margin per unit over the average margin (com- unit over the average margin (com- unit over the average margin (computed for the same unit) shall be puted for the same unit) shall be puted for the same unit) shall be multiplied by the number of such multiplied by the number of such multiplied by the number of such units represented by the articles units represented by the articles units represented by the articles with respect to which the compu- with respect to which the compu- with respect to which the computation is being made; but tation is being made; but tation is being made; but

Sec. 700. (e) (3) In no case shall the extent to which the taxpayer shifted to others the burden of the Federal excise tax with respect to the articles be deemed to exceed the amount of such tax with respect to such articles minus (A) the portion of the amount of the Federal excise tax (or of the reimbursement specified in subsection (a) (2)) with respect to the articles which is paid or credited by the taxpayer to any purchasers as specified in subsection (f) (3) and minus (B) the amount of any increase in the tax under section 3400 for which the taxpayer under this section became liable as the result of the nonpayment or refund of the Federal excise tax with respect to the articles.

Sec. 700. (f) As used in this section

Sec. 700. (e) (3) In no case shall Sec. 700. (e) (3) In no case shall the extent to which the taxpayer the extent to which the taxpayer shifted to others the burden of the shifted to others the burden of the Federal excise tax with respect to Federal excise tax with respect to the articles be deemed to exceed the articles be deemed to exceed the amount of such tax with re- the amount of such tax with respect to such articles minus (A) spect to such articles minus (A) the portion of the amount of the the portion of the amount of the Federal excise tax (or of the re- Federal excise tax (or of the reimbursement specified in subsection imbursement specified in subsection (a) (2)) with respect to the ar- (a) (2)) with respect to the articles which is paid or credited by ticles which is paid or credited by the taxpayer to any purchasers as the taxpayer to any purchasers as specified in subsection (f) (3) and specified in subsection (f) (3) and minus (B) the amount of any in- minus (B) the amount of any increase in the tax under section crease in the tax under section 3400 for which the taxpayer under 3400 for which the taxpayer under this section became liable as the this section became liable as the result of the nonpayment or refund result of the nonpayment or refund of the Federal excise tax with re- of the Federal excise tax with respect to the articles. spect to the articles.

Sec. 700. (f) As used in this section

Sec. 700. (f) As used in this section

Sec. 700. (f) (1) The term "mar- Sec. 700. (f) (1) The term "mar- Sec. 700. (f) (1) The term "margin" means the difference between gin" means the difference between gin" means the difference between the selling price of articles and the the selling price of articles and the the selling price of articles and the cost thereof, and the term "aver- cost thereof, and the term "aver- cost thereof, and the term "average margin" means the average age margin" means the average age margin" means the average difference between the selling price difference between the selling price difference between the selling price and the cost of similar articles and the cost of similar articles and the cost of similar articles sold by the taxpayer during his six sold by the taxpayer during his six sold by the taxpayer during his six taxable years preceding the initial taxable years preceding the initial taxable years preceding the initial imposition of the Federal excise imposition of the Federal excise imposition of the Federal excise tax in question, except that if dur- tax in question, except that if dur- tax in question, except that if during any part of such six-year pe-ing any part of such six-year pe- ing any part of such six-year pe

Taxable Years
Beginning in 1940

cost of such articles plus (B) the average margin with respect to the quantity involved; or

Taxable Years
Beginning in 1939

cost of such articles plus (B) the
average margin with respect to
the quantity involved; or

Sec. 700. (e) (2) If the taxpayer Sec. 700. (e) (2) If the taxpayer so elects by filing his return on so elects by filing his return on such basis, from the aggregate such basis, from the aggregate selling price of all articles with selling price of all articles with respect to which such Federal ex- respect to which such Federal excise tax was imposed and which cise tax was imposed and which were sold by him during the tax- were sold by him during the taxable year (computed without able year (computed without deduction of reimbursement to deduction of reimbursement to purchasers with respect to such purchasers with respect to such Federal excise tax) there shall be Federal excise tax) there shall be deducted the aggregate cost of such articles, and the difference shall be reduced to a margin per unit in terms of the basis on which the Federal excise tax was imposed. The excess of such margin per unit over the average margin (computed for the same unit) shall be multiplied by the number of such units represented by the articles with respect to which the computation is being made; but

deducted the aggregate cost of such
articles, and the difference shall
be reduced to a margin per unit
in terms of the basis on which the
Federal excise tax was imposed.
The excess of such margin per
unit over the average margin (com-
puted for the same unit) shall be
multiplied by the number of such
units represented by the articles
with respect to which the compu-
tation is being made; but

Sec. 700. (e) (3) In no case shall Sec. 700. (e) (3) In no case shall the extent to which the taxpayer the extent to which the taxpayer shifted to others the burden of the shifted to others the burden of the Federal excise tax with respect to Federal excise tax with respect to the articles be deemed to exceed the articles be deemed to exceed the amount of such tax with re- the amount of such tax with respect to such articles minus (A)spect to such articles minus (A) the portion of the amount of the the portion of the amount of the Federal excise tax (or of the re- Federal excise tax (or of the reimbursement specified in subsection imbursement specified in subsection (a) (2)) with respect to the ar- (a) (2)) with respect to the articles which is paid or credited by ticles which is paid or credited by the taxpayer to any purchasers as the taxpayer to any purchasers as specified in subsection (f) (3) and specified in subsection (f) (3) and minus (B) the amount of any in-minus (B) the amount of any increase in the tax under section crease in the tax under section 3400 for which the taxpayer under 3400 for which the taxpayer under this section became liable as the this section became liable as the result of the nonpayment or refund result of the nonpayment or refund of the Federal excise tax with re- of the Federal excise tax with respect to the articles. spect to the articles.

Sec. 700. (f) As used in this section

Sec. 700. (f) As used in this section

Sec. 700. (f) (1) The term "mar- Sec. 700. (f) (1) The term "margin" means the difference between gin" means the difference between the selling price of articles and the the selling price of articles and the cost thereof, and the term "aver-cost thereof, and the term "average margin" means the average age margin' means the average difference between the selling price difference between the selling and the cost of similar articles price and the cost of similar arsold by the taxpayer during his six ticles sold by the taxpayer during taxable years preceding the initial his six taxable years preceding the imposition of the Federal excise initial imposition of the Federal tax in question, except that if dur- excise tax in question, except that ing any part of such six-year pe- if during any part of such six-year

Taxable Years

Beginning before 1939

Taxable Years
Beginning in 1943

riod the taxpayer was not in business, or if his records for any part of such period are so inadequate as not to furnish satisfactory data, the average margin of the taxpayer for such part of such period shall, when necessary for a fair comparison, be deemed to be the average margin, as determined by the Commissioner, of representative concerns engaged in a similar business and similarly circumstanced.

Sec. 700. (f) (2) The term "cost" means, in the case of articles manufactured or produced by the taxpayer, the cost to the taxpayer of materials entering into the articles; or, in the case of articles purchased by the taxpayer for resale, the price paid by him for such articles (reduced in both cases by the amount for which he is reimbursed by his vendor).

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riod the taxpayer was not in busi- riod the taxpayer was not in business, or if his records for any part ness, or if his records for any part of such period are so inadequate of such period are so inadequate as not to furnish satisfactory data, as not to furnish satisfactory data, the average margin of the tax- the average margin of the taxpayer for such part of such period payer for such part of such period shall, when necessary for a fair shall, when necessary for a fair comparison, be deemed to be the comparison, be deemed to be the average margin, as determined by average margin, as determined by the Commissioner, of representative the Commissioner, of representative concerns engaged in a similar busi- concerns engaged in a similar business and similarly circumstanced. ness and similarly circumstanced.

Sec. 700. (f) (2) The term "cost" means, in the case of articles manufactured or produced by the taxpayer, the cost to the taxpayer of materials entering into the articles; or, in the case of articles purchased by the taxpayer for resale, the price paid by him for such articles (reduced in both cases by the amount for which he is reimbursed by his vendor).

Sec. 700. (f) (2) The term "cost" means, in the case of articles manufactured or produced by the taxpayer, the cost to the taxpayer of materials entering into the articles; or, in the case of articles purchased by the taxpayer for resale, the price paid by him for such articles (reduced in both cases by the amount for which he is reimbursed by his vendor).

Sec. 700. (f) (3) The term "sell- Sec. 700. (f) (3) The term "sell- Sec. 700. (f) (3) The term “selling price" means selling price ing price" means selling price ing price" means selling price minus (A) amounts subsequently minus (A) amounts subsequently minus (A) amounts subsequently paid or credited to the purchaser paid or credited to the purchaser paid or credited to the purchaser on or before June 1, 1936, or there- on or before June 1, 1936, or there- on or before June 1, 1936, or thereafter in the bona fide settlement of after in the bona fide settlement of after in the bona fide settlement of a written agreement entered into a written agreement entered into a written agreement entered into on or before March 3, 1936, as re- on or before March 3, 1936, as re- on or before March 3, 1936, as reimbursement for the amount in- imbursement for the amount in- imbursement for the amount included in such price on account of cluded in such price on account of cluded in such price on account of a Federal excise tax; and minus a Federal excise tax; and minus a Federal excise tax; and minus (B) the allocable portion of any (B) the allocable portion of any (B) the allocable portion of any professional fees and expenses of professional fees and expenses of professional fees and expenses of litigation incurred in securing the litigation incurred in securing the litigation incurred in securing the refund or preventing the collection refund or preventing the collection refund or preventing the collection of the Federal excise tax, not to of the Federal excise tax, not to of the Federal excise tax, not to exceed 10 per centum of the exceed 10 per centum of the exceed 10 amount of such tax. amount of such tax.

centum of the per amount of such tax.

were

manufactured,

Sec. 700. (g) In determining Sec. 700. (g) In determining Sec. 700. (g) In determining costs, selling prices, and net income, costs, selling prices, and net income, costs, selling prices, and net inthe taxpayer shall, unless otherwise the taxpayer shall, unless otherwise come, the taxpayer shall, unless shown, be deemed to have sold ar- shown, be deemed to have sold ar- otherwise shown, be deemed to ticles in the order in which they ticles in the order in which they have sold articles in the order in were manufactured, produced, or were manufactured, produced, or which they acquired. Where the taxpayer's acquired. Where the taxpayer's produced, or acquired. Where the records do not adequately establish records do not adequately establish taxpayer's records do not ade the quantity of a commodity taxable the quantity of a commodity taxable quately establish the quantity of under the Agricultural Adjustment under the Agricultural Adjustment a commodity taxable under the Act, 48 Stat. 31, as amended, enter- Act, 48 Stat. 31, as amended, enter- Agricultural Adjustment Act, 48 ing into articles sold by him, suching into articles sold by him, such Stat. 31, as amended, entering into quantities shall be computed by the quantities shall be computed by the articles sold by him, such quantiuse of the conversion factors pre- use of the conversion factors pre- ties shall be computed by the use scribed in regulations under such scribed in regulations under such of the conversion factors preAct, as amended. Act, as amended. scribed in regulations under such Act, as amended.

Sec. 700. (h) If the taxpayer Sec. 700. (h) If the taxpayer Sec. 700. (h) If the taxpayer made any purchase or sale other- made any purchase or sale other- made any purchase or sale otherwise than through an arm's wise than through an arm's wise than through an arm's

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riod the taxpayer was not in busi- period the taxpayer was not in ness, or if his records for any part business, or if his records for any of such period are so inadequate part of such period are so inadeas not to furnish satisfactory data, quate as not to furnish satisfacthe average margin of the tax- tory data, the average margin of payer for such part of such period the taxpayer for such part of such shall, when necessary for a fair period shall, when necessary for comparison, be deemed to be the a fair comparison, be deemed to average margin, as determined by be the average margin, as deterthe Commissioner, of representative mined by the Commissioner, of concerns engaged in a similar busi-representative concerns engaged in ness and similarly circumstanced. a similar business and similarly circumstanced.

Sec. 700. (f) (2) The term Sec. 700. (f) (2) The term "cost" means, in the case of ar- "cost" means, in the case of articles manufactured or produced by ticles manufactured or produced by the taxpayer, the cost to the tax- the taxpayer, the cost to the taxpayer of materials entering into payer of materials entering into the articles; or, in the case of ar- the articles; or, in the case of articles purchased by the taxpayer ticles purchased by the taxpayer for resale, the price paid by him for resale, the price paid by him. for such articles (reduced in both for such articles (reduced in both cases by the amount for which he cases by the amount for which he is reimbursed by his vendor). is reimbursed by his vendor).

Sec. 700. (f) (3) The term "sell- Sec. 700. (f) (3) The term "selling price" means selling price ing price" means selling price minus (A) amounts subsequently minus (A) amounts subsequently paid or credited to the purchaser paid or credited to the purchaser on or before June 1, 1936, or there- on or before June 1, 1936, or thereafter in the bona fide settlement of after in the bona fide settlement of a written agreement entered into a written agreement entered into on or before March 3, 1936, as re- on or before March 3, 1936, as reimbursement for the amount in-imbursement for the amount included in such price on account of cluded in such price on account of a Federal excise tax; and minus a Federal excise tax; and minus (B) the allocable portion of any (B) the allocable portion of any professional fees and expenses of professional fees and expenses of litigation incurred in securing the refund or preventing the collection of the Federal excise tax, not to exceed 10 per centum of the

amount of such tax.

litigation incurred in securing the
refund or preventing the collection
of the Federal excise tax, not to
exceed 10 per centum of the
amount of such tax.

Sec. 700. (g) In determining Sec. 700. (g) In determining costs, selling prices, and net in- costs, selling prices, and net income, the taxpayer shall, unless come, the taxpayer shall, unless otherwise shown, be deemed to otherwise shown, be deemed to have sold articles in the order in have sold articles in the order in which they were manufactured, which they were manufactured, produced, or acquired. Where the produced, or acquired. Where the taxpayer's records do not ade- taxpayer's records do not adequately establish the quantity of quately establish the quantity of a commodity taxable under the a commodity taxable under the Agricultural Adjustment Act, 48 Agricultural Adjustment Act, 48 Stat. 31, as amended, entering into Stat. 31, as amended, entering into articles sold by him, such quanti- articles sold by him, such quantities shall be computed by the use ties shall be computed by the use of the conversion factors pre- of the conversion factors prescribed in regulations under such scribed in regulations under such Act, as amended. Act, as amended.

Sec. 700. (h) If the taxpayer Sec. 700. (h) If the taxpayer made any purchase or sale other- made any purchase or sale otherthan through an arm's-wise than through an arm's

wise

Taxable Years

Beginning before 1939

Taxable Years
Beginning in 1943

Taxable Years
Beginning in 1942

Taxable Years
Beginning in 1941

length transaction, and at a price length transaction, and at a price length transaction, and at a price other than the fair market price, other than the fair market price, other than the fair market price, the Commissioner may determine the Commissioner may determine the Commissioner may determine the purchase or sale price to be the purchase or sale price to be the purchase or sale price to be that for which such purchases or that for which such purchases or that for which such purchases or sales were at that time made in sales were at that time made in sales were at that time made in the ordinary course of trade. the ordinary course of trade. the ordinary course of trade.

Sec. 700. (i) Either the taxpayer or the Commissioner may rebut the presumption established by subsection (e) by proof of the actual extent to which the taxpayer shifted to others the burden of the Federal excise tax. Such proof may include, but shall not be limited to:

Sec. 700. (i) Either the tax- Sec. 700. (i) Either the taxpayer or the Commissioner may payer or the Commissioner may rebut the presumption established rebut the presumption established by subsection (e) by proof of the by subsection (e) by proof of the actual extent to which the taxpayer actual extent to which the taxpayer shifted to others the burden of the shifted to others the burden of the Federal excise tax. Such proof Federal excise tax. Such proof may include, but shall not be may include, but shall not be limited to: limited to:

Sec. 700. (i) (1) Proof that the Sec. 700. (i) (1) Proof that the Sec. 700. (i) (1) Proof that the change or lack of change in the change or lack of change in the change or lack of change in the margin was due to changes in fac-[margin was due to changes in fac- margin was due to changes in factors other than the tax. Such tors other than the tax. Such tors other than the tax. Such factors shall include any clearly factors shall include any clearly factors shall include any clearly shown change (A) in the type or shown change (A) in the type or shown change (A) in the type or grade of article or materials, or grade of article or materials, or grade of article or materials, or (B) in costs of production. If the (B) in costs of production. If the (B) in costs of production. If the taxpayer asserts that the burden taxpayer asserts that the burden taxpayer asserts that the burden of the tax was borne by him while of the tax was borne by him while of the tax was borne by him while the burden of any other increased the burden of any other increased the burden of any other increased cost was shifted to others, the Com- cost was shifted to others, the Com-cost was shifted to others, the Commissioner shall determine, from the missioner shall determine, from the missioner shall determine, from the respective effective dates of the tax respective effective dates of the tax respective effective dates of the tax and of the other increase in cost as and of the other increase in cost as and of the other increase in cost as compared with the date of the compared with the date of the compared with the date of the change in margin, and from the change in margin, and from the change in margin, and from the general experience of the industry, general experience of the industry, general experience of the industry, whether the tax or the increase in whether the tax or the increase in whether the tax or the increase in other cost was shifted to others. If other cost was shifted to others. If other cost was shifted to others. If the Commissioner determines that the Commissioner determines that the Commissioner determines that the change in margin was due in the change in margin was due in the change in margin was due in part to the tax and in part to the part to the tax and in part to the part to the tax and in part to the increase in other cost, he shall ap- increase in other cost, he shall ap- increase in other cost, he shall apportion the change in margin be- portion the change in margin be- portion the change in margin between them. tween them. tween them.

Sec. 700. (i) (2) Proof that the

Sec. 700. (i) (2) Proof that the Sec. 700. (i) (2) Proof that the taxpayer modified contracts of taxpayer modified contracts of taxpayer modified contracts of sale, or adopted a new contract of sale, or adopted a new contract of sale, or adopted a new contract of sale, to reflect the initiation, ter- sale, to reflect the initiation, ter- sale, to reflect the initiation, termination, or change in amount of mination, or change in amount of mination, or change in amount of the Federal excise tax, or at any the Federal excise tax, or at any the Federal excise tax, or at any such time changed the sale price such time changed the sale price such time changed the sale price of the article (including the effect of the article (including the effect of the article (including the effect of a change in size, package, dis- of a change in size, package, dis- of a change in size, package, discount terms, or any other mer- count terms, or any other mer- count terms, or any other merchandising practice) by substan-chandising practice) by substan-chandising practice) by substantially the amount of the tax or tially the amount of the tax or tially the amount of the tax or change therein, or at any time change therein, or at any time change therein, or at any time billed the tax as a separate item billed the tax as a separate item billed the tax as a separate item to any vendee or indicated by any to any vendee or indicated by any to any vendee or indicated by any writing that the sale price included writing that the sale price included writing that the sale price included the amount of the tax, or con- the amount of the tax, or con- the amount of the tax, or contracted to refund any part of the sale price in the event of recovery of the tax or decision of its in

tracted to refund any part of the
sale price in the event of recovery
of the tax or decision of its in-

tracted to refund any part of the sale price in the event of recovery of the tax or decision of its in

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