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" 1.1374-Ia (D ... 1545-0130". May Petition ATF to Establish a Grape- Ferguson States the Following Roscoe L

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34204 .. Federal Register /:'Vol.'51, N6*1 87]'/ riday, September 26,'1986, / Rules and Regulations 34204 Federal Register I 'Vol. 51, Nd. 187 f Friday, September 26, 1986 / Rules and Regulations Examples. The following example in the State of Arkansas to be known as No comments have been received. -illustrates the principles of this section: "Arkansas Mountain." This decision is Therefore, this document establishes the Example (1) Assume Corporation M, an S the result of a petition submitted by Mr. "Arkansas Mountain" viticultural area corporation, has for its taxable year total Al Wiederkehr, a winery owner and with boundaries as proposed in Notice gross receipts of $200,000, passive investment grape grower in the area. The No. 588. income of $100,000; $60,000 of which is establishment of viticultural areas and interest income, and expenses directly the subsequent use of viticultural area Name of the Area connected with the production of such names in wine labeling and advertising The following evidence, submitted by interest income in the amount of $10,000. enables winemakers to label wines the petitioner, establishes that the new Assume also that at the end of the taxable more precisely and helps consumers to viticultural area is known by the name year Corporation M has Subchapter C better identify the wines they purchase. of "Arkansas Mountain": earnings and profits. Since more than 25 percent of the Corporation M's total gross EFFECTIVE DATE: October 27, 1986. (a] The name "Arkansas Mountain" receipts are passive investment income, and FOR FURTHER INFORMATION CONTACT. has been used on wine labels by the since Corporation M has Subchapter C Mr. Steve Simon, FAA, Wine and Beer petitioner to designate wines from this earnings and profits at the end of the taxable Branch, Bureau of Alcohol, Tobacco and area since 1974. year, Corporation M will be subject to the tax Firearms, 1200 Pennsylvania Avenue (b) Published descriptions of the area imposed by section 1375. The amount of NW, Washington, DC 20226 (202-566- have referred to it as the "Arkansas excess net passive investment income is 7626). Mountains." For example, the "Holiday $45,000 ($90,000 X (50,000/100,000)). Assume that the other $40,000 of passive investment SUPPLEMENTARY INFORMATION: Inn Magazine for Travelers," in an income is attributable to net capital gain and October 1969 article entitled "Vineyard that there are no expenses directly connected Background Village," stated: "Finding the grape- with such gain. Under these facts, $20,000 of ATF regulations in 27 CFR Part 4 laden vineyards, a colorful chalet with the excess net passive income is attributable provide for the establishment of definite gay window boxes, and huge wine to the net capital gain ($45,000x ($40,000/ viticultural areas. The regulations also cellars in the Arkansas mountains is an $90,000)). Accordingly, the amount of gain allow the name of an approved . unexpected adventure to most tourists. taken into account under section 1374[b)1) viticultural area to be used as an Yet the colony has been there for more and the taxable income of Corporation M than 80 years." Further, the Rev. under section 1374(b)[2) shall be reduced by appellation of origin on wine labels and $20,000. in wine advertisements. Placidus Oechsle, in his Historical Part 9 of 27 CFR provides for the Sketch of the Congregationof Our Lady listing of approved American viticultural of PerpetualHelp (1930], wrote as PART 602-[AMENDED] areas, the names of which may be used follows: "The Baron ... praised the Par. 4. as appellations of origin. thrifty and industrious settlers of The authority for Part 602 Section Teutonic blood, who had made in a few continues to read as follows: 4.25a(e)(1), Title 27 CFR, defines an American viticultural area as years a garden spot of a wilderness. Authority: 26 U.S.C. 7805 * . * a delimited grape-growing region They had selected the Arkansas Par. 5. Section 602.101(c) is amended distinguishable by geographical Mountains ... to become their home." by inserting in the appropriate place in features. Section 4.25a(e)(2) outlines the (c) The origin of the term "Arkansas the table procedures for proposing an American Mountain" was described by the viticultural area. Any interested person petitioner as follows: "Dr. John L. " 1.1374-iA (d ... 1545-0130". may petition ATF to establish a grape- Ferguson states the following Roscoe L. Egger, Jr., growing region as a viticultural area. information in reference to the Arkansas Commissionerof InternalRevenue. Petition Mountains. The name Arkansas came Approved: September 3, 1986. before Ozark or 'Aux Arcs' which ATF received a petition from Mr. Al means of the Arkansas or from among 1. Roger Mentz, Wiederkehr, Chairman of the Board and the Arkansas. The name Arkansas Assistant Secretary of the Treasury. Chief Executive Officer of Wiederkehr comes from the Arkansas Indians who [FR Doc. 86-21723 Filed 9-25-86; 8:45 am] Wine Cellars, Inc., proposing an area in lived in the area. The Arkansas River ILLING CODE 4030-01-M northwestern Arkansas as a viticultural was given its name to indicate that it area to be known as "Arkansas was the river of the Arkansas (Indians); Mountain." The area contains about .therefore the Arkansas River. The DEPARTMENT OF THE TREASURY 4,500 square miles. Within the area, mountains in the vicinity of the approximately 1,200 acres are currently Arkansas River were also given that Bureau of Alcohol, Tobacco and planted to grapes. The area is located in Firearms name to mean also the mountains of the the mountainous region of Arkansas, Arkansas (Indians); therefore the both north and south of the Arkansas Arkansas Mountains." 27 CFR Part 9 River. There are six bonded wineries or [I.D. AFT-235; Ref. Notice No, 588] bonded wine cellars authorized to Geography of the Area operate within the area. The following evidence establishes Establishment of Arkansas Mountain that Viticultural Area Notice of Proposed Rulemaking the new viticultural area is In response to the petition, ATF distinguished geographically from its AGENCY: Bureau of Alcohol, Tobacco published a notice of proposed surrounding areas: and Firearms, Department of the rulemaking, Notice No. 588, in the (a) To the north and west, the area is Treasury. Federal Register on Monday, April 7, distinguished from neighboring areas on ACTION: Final rule; Treasury decision. 1986 (51 FR 11753). That notice proposed the basis of mean winter minimum establishment of the "Arkansas temperature. The petitioner submitted SUMMARY: The Bureau of Alcohol, data collected over 50 years from 42 } Mountain" viticultural area and solicited Tobarco and Firearms (ATF has public comment concerning the locations (7 inside the area and 35 decided to establish a viticultural area proposal. outside of it). The data showed that Federal Register / Vol. 51,: No. 187 / Friday, September 26,, 1986 /I Rules and Regulations 34205 locations to the north and west of the The "Arkansas Mountain" boundaries (c) Significant adverse effects on area regularly experience significantly entirely enclose the approved "Altus" competition, employment, investment, colder mean winter minimum viticultural area. Further, the "Arkansas productivity, or on the ability of United temperatures. According to Professor Mountain" area is itself entirely States-based enterprises to compete Justin R. Morris of the University of enclosed within the approved "Ozark with foreign-based enterprises in Arkansas Division of Agriculture, this Mountain" area. In establishing a domestic or export markets. distinction "is due to the effects of the viticultural area based on geographical Paperwork Reduction Act mountains." The protective effects of the features which affect viticultural Arkansas mountains were described by, features, ATF recognizes that the The provisions of the Paperwork the petitioner, quoting at length from distinctions between a smaller area and Reduction Act of 1980, Pub. L..96-511, 44 NaturalResources of the State of its surroundings are more refined than U.S.C. Chapter 35, and its implementing Arkansas (1869) by James M. Lewis. In the differences between a larger area regulations, 5 CFR Part 1320, do not that book, Mr. Lewis claimed that and its surroundings. It is possible for a apply to this final rule, because no protection from cold northern weather is large viticultural area to contain requirement to collect information is due to the fact that the Ozark and approved viticultural areas, if each area imposed. Ouachita Mountains range east and fulfills the requirements for List of Subjects in 27 CFR Part 9 west, rather than north and south (as establishment of a viticultural area. within the Appalachians, for example). Administrative practice and Miscellaneous Consequently, Mr. Lewis said, the , procedures, Consumer protection, mountains provide shelter from violent ATF does not want to'give the Viticultural areas, Wine. - winds and sudden changes in impression by approving "Arkansas Drafting Information - temperature coming from the north; Mountain" as a viticultural area that it (b) To the east, the data is ambiguous is approving or endorsing the quality of The principal author of this document as to the existence of a temperature the wine from this area. ATF is is Steve Simon, FAA, Wine and Beer difference as described above. approving this area as being distinct but Branch, Bureau of Alcohol, Tobacco and However, the eastern boundary does not better than other areas. By Firearms. correspond approximately to a approving this area, ATF will allow Issuance topographical change, where the Boston wine producers to claim a distinction on and Ouachita Mountains begiftheir labels and advertisements as to the Accordingly, 27 CFR Part 9 is descent to the alluvial plain of the origin of the grapes. Any'commercial amended as follovs: advantage can only come'from MississippiRiver. This topographical PART 9--AMERICAN VITICULTURAL change is reflected in a change in the consumer acceptance of "Arkansas character of the soil; for instance, the Mountain" wines.
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