Rev. Rul. 63-242

A retailer sells various types of articles, some of which are subject to the retailers excise taxes, under contracts which provide that the price shall be paid by installments and that title to the articles sold does not pass until a future date notwithstanding partial payment by installments. Sales of taxable articles under these contracts qualify for the special tax treatment provided by section 4053(a) of the Internal Revenue Code of 1954. An installment contract with a particular customer may cover the sale of both taxable and nontaxable articles in the same transaction. Held , for purposes of determining the amount of the retailers excise tax incurred by the retailer with respect to payments received under such a contract, each payment should be prorated on the basis of the separate prices for which the taxable and the nontaxable articles are sold. For example, if a retailer sells to one customer at the same time a taxable article (or articles) for a tax-included price of 11 x dollars and a nontaxable article (or articles) for a price of 5 x dollars, 11/16 ths of each payment received with respect to that sale should be considered to be a tax-included payment attributable to the taxable article(s) and subject to the provisions of section 4053(a) of the Code.