Rev. Rul. 63-161

Advice has been requested whether the manufacturers excise tax on `phonograph records' applies to so-called `electrical transcriptions' which are used for radio or television broadcasting purposes.

Section 4141 of the Internal Revenue Code of 1954 imposes a tax upon the sale by the manufacturer, producer, or importer of certain enumerated articles (including in each case parts or accessories therefor sold on or in connection with the sale thereof). Among those articles are `phonograph records.'

Section 48.4141-1(d) of the regulations provides that the term `phonograph records' means all disks, cylinders, or other articles, regardless of the material from which they are made, upon which are recorded music, speech, or other sounds which are capable of reproduction by means of a phonograph. The term does not include tape or wire recordings.

Section 607 of the Revenue Act of 1932 imposed a tax on `records for phonographs' sold by the manufacturer, producer, or importer. Under these provisions of prior law and the applicable regulations, it was held, in S.T. 823, C.B. XIV-2, 369 (1935), that the tax did not apply to electrical transcriptions which were used for broadcasting purposes and which were not commonly and commercially known as `records for phonographs.' However, the tax on `records for phonographs' was repealed by section 701(c) of the Revenue Act of 1938.

Under the provisions of section 48.4141-1(d) of the current regulations, the test for determining whether articles come within the scope of the term `phonograph records' is whether such articles are capable of reproduction by means of a phonograph , without regard to the use for which they are intended or the name by which they are known.

Therefore, the manufacturers excise tax imposed by section 4141 of the Code on `phonograph records' applies to all articles which are capable of reproduction by means of a phonograph even though they may be known as `electrical transcriptions' and may be intended for use in radio or television broadcasting.