Internal Revenue Service, Treasury § 48.4161(a)–1 (e.g., trees, earth, rock) above the coal being cleaned) or f.o.b. cleaning plant is removed before the coal is mined. In (if the coal is cleaned before it is used). addition, both coal mined by auger and Normally, this constructive price will coal that is reclaimed from coal waste be the same as the constructive price refuse piles are treated as produced used in determining the producer’s per- from a surface mine. centage depletion deduction. (2) Coal produced from underground [T.D. 7726, 45 FR 66453, Oct. 7, 1980; 45 FR mine. Coal is treated as produced from 69214, Oct. 20, 1980; T.D. 8448, 57 FR 48186, Oct. an underground mine if it is not pro- 22, 1992] duced from a surface mine. (3) Coal used by the producer. For pur- Subpart J [Reserved] poses of this section, the term ‘‘coal used by the producer’’ means use by the producer in other than a mining Subpart K—Sporting Goods process. A mining process is deter- mined the same way it is determined SOURCE: Sections 48.4161(a)–1 to 48.4161(b)–5 for percentage depletion purposes. For contained in T.D. 7328, 39 FR 36586, Oct. 11, 1974 unless otherwise noted. Sections 48.4181– example, a producer who mines coal 1 to 48.4182–2 contained in T.D. 6454, 25 FR does not ‘‘use’’ the coal and thereby be- 1774, Mar. 1, 1960, unless otherwise noted. comes liable for the tax merely be- cause, before selling the coal, the pro- § 48.4161(a) [Reserved] ducer breaks it, cleans it, sizes it, or applies one of the other processes listed § 48.4161(a)–1 Imposition and rate of in section 613(c)(4)(A) of the Code. In tax; fishing equipment. such a case, the producer will be liable (a) Imposition of tax. Section 4161(a) for the tax only when he sells the coal. imposes a tax on the sale of the fol- On the other hand, a producer who lowing articles of fishing equipment mines coal does become liable for the (including in each case parts or acces- tax when he uses the coal as fuel, as an sories of such articles sold on or in con- ingredient in making coke, or in an- nection therewith or with the sale other process not treated as ‘‘mining’’ thereof) by the manufacturer, pro- under section 613(c). ducer, or importer thereof: (4) Tonnage sold and sales price. For (1) Fishing rods; purposes of determining both the (2) Fishing creels; amount of coal sold by a producer and (3) Fishing reels; and the sales price of the coal, the point of (4) Artificial lures, baits, and flies. sale is f.o.b. mine, or f.o.b. cleaning The tax applies only to those items of point if the producer cleans the coal fishing equipment specified in section before selling it. This is true even if 4161(a) and this paragraph. Therefore, the producer sells the coal on the basis other items of fishing equipment, such of a delivered price. Accordingly, f.o.b. as fishing nets, lines, hooks, sinkers, mine or cleaning point is the point at gaffs, etc., are not subject to the tax. which the number of tons sold is to be Furthermore, the tax applies only to determined for purposes of applying those specified articles of fishing the applicable tonnage rate, and the equipment that are designed or con- point at which the sales price is to be structed for use in the sport of fishing. determined for purposes of the tax Accordingly, the tax does not apply to under the 2 percent rate. those articles which, although nomi- (5) Constructive sale price. If a pro- nally articles that are specified in sec- ducer uses coal mined by the producer tion 4161(a), are in the nature of toys or in other than a mining process, a con- novelties that merely simulate articles structive sale price must be used in de- of a type referred to in section 4161(a), termining the tax under the 2 percent and are not designed or constructed for rate. This constructive price is deter- practical use in the sport of fishing. mined under sections 613(c) and 4218(e) (b) Rate of tax. Tax is imposed on the of the Code, and is based on sales of sale of the articles enumerated in sec- like kind and grade of coal by the pro- tion 4161(a) and paragraph (a) of this ducer or other producers made f.o.b. section at the rate of 10 percent of the mine (if the coal is used without first price for which such articles are sold. 141 VerDate jul<14>2003 14:27 May 04, 2004 Jkt 203097 PO 00000 Frm 00141 Fmt 8010 Sfmt 8010 Y:\SGML\203097T.XXX 203097T § 48.4161(a)–2 26 CFR Ch. I (4–1–04 Edition) For the definition of the term ‘‘price’’ tured. Thus, the term includes such ar- see section 4216 and the regulations tifacts as imitation flies, blades, thereunder. spoons, and spinners, and edible mate- (c) Liability for tax. The tax imposed rials that have been processed so as to by section 4161(a) is payable by the resemble a different edible article con- manufacturer, producer, or importer sidered more attractive to fish, such as making the sale. For determining who bread crumbs treated so as to simulate is the manufacturer, producer, or im- salmon eggs, and pork rind cut and porter, see § 48.0–2(a)(4). dyed to resemble frogs, eels, or tad- poles. [T.D. 7328, 39 FR 36586, Oct. 11, 1974, as amended by T.D. 8043, 50 FR 32014, Aug. 8, [T.D. 7328, 39 FR 36586, Oct. 11, 1974, as 1985] amended by T.D. 8043, 50 FR 32014, Aug. 8, 1985] § 48.4161(a)–2 Meaning of terms. (a) Fishing rods. The term ‘‘fishing § 48.4161(a)–3 Parts and accessories. rods’’ includes all articles, however, (a) In general. The tax attaches with designated, that are designed or con- respect to parts and accessories for ar- structed for use in conjunction with a ticles specified in section 4161(a) and fishing reel for casting a line and hook § 48.4161(a)–1 that are sold on or in con- in the sport of fishing. The term does nection with such articles, or with the not include any article that is neither sale thereof, at the same rate applica- designed for use in casting, nor suit- ble to the sale of the basic articles. The able for such use. A so-called fishing tax attaches in such cases whether or rod ‘‘blank’’ is not considered to be a not charges for the parts or accessories ‘‘fishing rod’’ unless the blank contains are billed separately. To be considered an affixed handle and reel seat, or is a part or accessory for an article speci- sold in the form of a kit that contains fied in section 4161(a), an item must be a rod blank, a handle, and a reel seat. either essential to the operation of the (b) Fishing creels. The term ‘‘fishing specified article, or be designed to di- creels’’ includes all portable con- rectly improve the performance of the tainers, of whatever material made, specified article, or to improve its ap- that are designed for storing and car- pearance. For example, a carrying case rying fish from the time they are for a fishing rod is not considered to be caught until such time as they are re- a part or accessory for a fishing rod, moved from the container for consump- despite the fact that it is designed for tion or preservation. The term does not use with the rod, because it is neither include any article primarily designed essential to the use of the rod, nor does for use in the commercial fishing in- it in any way improve its performance dustry, or an article such as a collaps- or appearance. A sale of a part or ac- ible wire basket designed to be hung cessory which would otherwise be con- over the side of a boat to keep fish cap- sidered a sale ‘‘on or in connection tive and alive in the water. with’’ the sale of an article taxable (c) Fishing reels. The term ‘‘fishing under section 4161(a), is not subject to reels’’ includes all mechanical and tax if the part or accessory is sold as a electrical devices that contain a spool replacement for an identical part or ac- for dispensing and recovering fishing cessory being sold with the taxable ar- line, and are designed for use with fish- ticle. ing rods in casting and in reeling in (b) Essential equipment. If taxable ar- hooked fish in the sport of fishing. The ticles are sold by the manufacturer, term also includes reels designed for producer, or importer thereof, without use with bows, in the sport of parts or accessories that are essential bowfishing. for their operation, or are designed di- (d) Artificial lures, baits, and flies. The rectly to improve the performance or term ‘‘artificial lures, baits, and flies’’ appearnace of the articles, the separate includes all artifacts, of whatever ma- sale of the parts accessories to the terials made, that simulate an article same vendee will be considered, in the considered edible by fish and are de- absense of evidence to the contrary, to signed to be attached to a line or hook have been made in connection with the to attract fish so that they may be cap- sale of the basic article, even though 142 VerDate jul<14>2003 14:27 May 04, 2004 Jkt 203097 PO 00000 Frm 00142 Fmt 8010 Sfmt 8010 Y:\SGML\203097T.XXX 203097T Internal Revenue Service, Treasury § 48.4161(b)–2 the parts or accessories are shipped (c) Liability for tax.