TRANSFER OF WINE IN BOND IN RESERVE INVENTORY
Proprietors of bonded wine cellars
and others concerned:
Purpose. This circular is to inform you of the procedure to be
followed when wine in reserve inventory is transferred in bond to an
affiliated bonded wine cellar, located within the same State, for the
addition of wine spirits or sweetening, or both, as provided in section 240.371 of the wine regulations.
Background. Public Law 85-859 amended section 5392 of the
Internal Revenue Code of 1954 to include in the term "own production"
wine produced by fermentation in bonded wine cellars owned or controlled by the same or affiliated persons or firms when located within
the same State.
Procedure by consignor: When wine in reserve inventory is transferred in bond, to an affiliated bonded wine cellar located within the
same State, the sugar credits, if any, (as shown on Form 2055) must
also be transferred for each lot. The sugar credits available for all
wine remaining on hand in reserve inventory must be recomputed and
entered on Form 2055. An appropriate entry should be made on Form
2055 on the date of transfer; an entry should be made on line 24 or 25
of Form 702 for the month, showing, "Transferred to affiliated BWC's Reserve Inventory"; and the gallons of wine transferred should be
entered in column "d". The Form 703, prepared by the consignor bonded
wine cellar, for each such transfer must show on the reverse side
thereof the following additional information:
1. Pounds of sugar credits transferred with this lot
2. Transferred in reserve inventory on _________.
(Date) Procedure by consignee:
On receipt, the consignee bonded wine
cellar shall enter the wine in his reserve inventory account, and enter
the pounds of sugar credits transferred with each lot on his record,
Form 2055. The sugar credits available for all the wine in reserve
inventory must be recomputed and entered on Form 2055. An appropriate
entry should be made on line 8 or 9 of Form 702 for the month, showing,
"Rec'd from affiliated BWC's Reserve Inventory"; and the gallons of
wine received should be entered in column "d".
Inquiries. Inquiries regarding this industry circular should
refer to its number and be addressed to the office of your assistant
regional commissioner (alcohol and tobacco tax).
Dwight E. Avis
Director, Alcohol Tobacco Tax Division