Opinion ID: 308206
Heading Depth: 1
Heading Rank: 5

Heading: Excise Taxes on Alfa Romeos Imported by Hoffman Motor

Text: 15 and Sold at Retail by Western. 16 Hoffman Motor imported Alfa Romeo automobiles and sold them to dealers throughout the United States. Western, another subsidiary, was the exclusive West Coast distributor. Alfa Romeos sold to Western received special crating costing $69.66. Alfas were sold to independent dealers in other parts of the country, as to whom special crating was not required, at a price of $2,548.00 per car. They were sold to Western at $2,591.66, including the special crating charge; thus, Hoffman Motor absorbed $26 of Western's crating expense. This was done, however, although the district court made no specific finding in this regard, apparently because Hoffman Motor's contract with the Italian manufacturer required a nationwide uniform retail price. 17 Section 4216(a) of the 1954 Code requires that the excise tax base include container charges. 7 The Commissioner and the court below held that a constructive sales price equal to the full retail price charged to independent dealers in other parts of the country ($2,548.00) plus the full crating price ($69.66), totaling $2,617.66, must be used under Sec. 4216(b) (1) (C), quoted in footnote 3, above, because the basis that the vehicles sold by Hoffman Motor to Western were not sold at arm's length-concededly-and were sold at less than the fair market price within the statute. But, if there were truly a manufacturer imposed requirement of a uniform national sales price it is likely that something like the discount given by Hoffman Motor to Western would have occurred in an arm's length transaction. The manufacturer's requirement of retail sales being at a uniform price, if indeed there were such a requirement, would be one of the business realities, see Quaker City Iron Works, Inc. v. United States, 256 F.Supp. 450 (E.D.Pa.1966); cf. Gregory v. Helvering, supra, 293 U.S. at 469-470, 55 S.Ct. 266, 79 L.Ed. 596, which would permit the taxpayer here to look through form to substance. If Hoffman Motor had absorbed the entire crating cost suspicion would be invited that this was done to minimize the excise tax, but the approximate 60%-40% split here seems reasonable. Of course, if Hoffman Motor sold to Western at a lower price than to independent western distributors the price to the independent western distributors would be the effective base for computing the excise tax on the Hoffman-Western sales. We were told on argument that there were no independent western distributors, but the court below did not make any finding on this point. 18 We accordingly remand on this point for further findings. In doing so we do not foreclose the court below from taking further evidence concerning tax avoidance motivation or otherwise bearing on the Alfa transactions. But on the facts as they now appear we fail to see what advantage there would be to Hoffman Motor or to its western distributor-subsidiary in agreeing to, let alone instigating, a requirement of a uniform national retail price. Absent such, the explanation that each was absorbing a portion of the special crating cost does not seem unreasonable, and the fair market price to Western would be the $2,591.66 per vehicle on which excise tax was paid by the taxpayer. 19