Rev. Rul. 59-263

Advice has been requested whether the manufacturers excise tax on business machines is applicable to sales by the importer of a pocket-size device used for performing simple operations of addition and subtraction.

A company imports a so-called `adding machine' which is a modern version of the abacus reduced in size to a flat metal case for easy carrying. The device consists of a series of parallel metal counters with numerals printed thereon. The device is manipulated by inserting a stylus in appropriate slots and by sliding the movable counters. The numerical results appear on another portion of the counters which have been thus moved by hand. The device comes in two models. One model can produce a numerical total up to six digits, while the other model can produce a numerical total up to nine digits.

Section 4191 of the Internal Revenue Code of 1954 imposes a tax upon the sale by the manufacturer, producer, or importer of various business machines enumerated in that section. Adding machines are included in that enumeration.

It is held that the pocket-size device described above is not considered to be an adding machine within the meaning of section 4191 of the Code. Accordingly, sales of such a device by the manufacturer, producer, or importer are not subject to the manufacturers excise tax on business machines.