Rev. Rul. 61-155

A manufacturer of taxable business machines leases those machines to various customers. The manufacturer does not make any sales of the machines. Upon originally leasing a machine, a customer requests the manufacturer to make certain changes or additions to the basic machine so that it will perform certain special operations for that customer. Although there is no increase in the monthly lease payments for the altered machine, the manufacturer bills the customer a `one-time charge' for the alterations. This charge includes costs attributable to material, labor, overhead, and a margin of profit. Held , under the provisions of section 4217(a) and section 4216(c) of the Internal Revenue Code of 1954, the manufacturers excise tax on business machines, imposed by section 4191 of the Code, applies to the full amount of the `one-time charge' made by the manufacturer for the special changes or additions to the machine, as well as to the monthly payments under the lease.