Frequently Asked Questions
Who is eligible for the Income Tax Credit for Average Cost of Carrying Excise Tax?
Eligible wholesalers of distilled spirits or persons subject to IRC 5005 who store spirits in certain state-operated warehouses.
How does the Income Tax Credit for Average Cost of Carrying Excise Tax work?
An income tax credit (part of the General Business Credit) to offset the interest costs associated with carrying the federal excise tax on bottled distilled spirits inventory.
What law authorizes the Income Tax Credit for Average Cost of Carrying Excise Tax?
The Income Tax Credit for Average Cost of Carrying Excise Tax is authorized under IRC §5011 of the Internal Revenue Code (Title 26, United States Code).
Statutory Text — IRC §5011
Source: Internal Revenue Code, Title 26, United States Code
§ 5011. Income tax credit for average cost of carrying excise tax(a) In generalFor purposes of section 38, the amount of the distilled spirits credit for any taxable year is the amount equal to the product of—(1) in the case of—(A) any eligible wholesaler, the number of cases of bottled distilled spirits—(i) which were bottled in the United States, and
(ii) which are purchased by such wholesaler during the taxable year directly from the bottler of such spirits, or
(B) any person which is subject to section 5005 and which is not an eligible wholesaler, the number of cases of bottled distilled spirits which are stored in a warehouse operated by, or on behalf of, a State or political subdivision thereof, or an agency of either, on which title has not passed on an unconditional sale basis, and
(2) the average tax-financing cost per case for the most recent calendar year ending before the beginning of such taxable year.
(b) Eligible wholesalerFor purposes of this section, the term “eligible wholesaler” means any person which holds a permit under the Federal Alcohol Administration Act as a wholesaler of distilled spirits which is not a State or political subdivision thereof, or an agency of either.
(c) Average tax-financing cost(1) In generalFor purposes of this section, the average tax-financing cost per case for any calendar year is the amount of interest which would accrue at the deemed financing rate during a 60-day period on an amount equal to the deemed Federal excise tax per case.
(2) Deemed financing rateFor purposes of paragraph (1), the deemed financing rate for any calendar year is the average of the corporate overpayment rates under paragraph (1) of section 6621(a) (determined without regard to the last sentence of such paragraph) for calendar quarters of such year.
(3) Deemed Federal excise tax per caseFor purposes of paragraph (1), the deemed Federal excise tax per case is $25.68.
(d) Other definitions and special rulesFor purposes of this section—(1) CaseThe term “case” means 12 80-proof 750-milliliter bottles.
(2) Number of cases in lotThe number of cases in any lot of distilled spirits shall be determined by dividing the number of liters in such lot by 9.
(Added Pub. L. 109–59, title XI, § 11126(a), Aug. 10, 2005, 119 Stat. 1957.)
Editorial Notes
References in TextThe Federal Alcohol Administration Act, referred to in subsec. (b), is act Aug. 29, 1935, ch. 814, 49 Stat. 977, which is classified generally to subchapter I (§ 201 et seq.) of chapter 8 of Title 27, Intoxicating Liquors. For complete classification of this Act to the Code, see section 201 of Title 27 and Tables.
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