Rev. Rul. 56-480

Section 4216(d) of the Internal Revenue Code of 1954, as added by Public Law 317, 84th Congress, C.B. 1955-2, 760, provides that in the case of any lease of a trailer or semitrailer taxable under section 4061(a) and suitable for use in connection with passenger automobiles, there shall be paid, at the election of the taxpayer, (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. Held, the total amount of the manufacturers excise tax liability, under either election, is determined by the rate of tax in effect on the date of the initial lease. However, where there is an election to pay the tax under the method set forth under (2) above, the tax payable on each lease payment should be computed at the rate in effect on the date the lease payment is received. The taxpayer will continue to pay the tax on that basis until the total amount of his tax payments equals the total amount of his liability.