Rev. Rul. 54-320

Advice is requested whether the tax on sporting goods imposed by section 3406(a)(1) of the Internal Revenue Code applies to the sale by the manufacturer of a table for use as a table tennis table, even though in a knockdown or unpainted condition.

Section 3406(a)(1) of the Code imposes a tax on the sale by a manufacturer, producer, or importer of the articles enumerated therein, including table tennis tables, balls, nets, and paddles. Under the provisions of section 316.4 of Regulations 46, a manufacturer who sells a taxable article in a knockdown condition, but complete as to all component parts, is liable for the tax on such sale.

It is held that the tax imposed by section 3406(a)(1) of the Code applies to the sale by the manufacturer of any table which is advertised, or sold by him primarily for use as a table tennis table, even though such table may be unpainted and unstriped and sold in a knockdown condition. If, however, unpainted and unstriped tables are sold by the manufacturer essentially and primarily for use as utility tables, the tax is not applicable to such sales, regardless of the fact that in the manufacturer's advertising an incidental reference may be made to the use of such tables for table tennis along with other specified uses.