1513-0053 Law and Regs.

1513-0053

26 U.S.C.

Sec. 5367. Records

The proprietor of a bonded wine cellar or a tax-paid wine bottling

house shall keep such records and file such returns, in such form and

containing such information, as the Secretary may by regulations

provide.

(Added Pub. L. 85-859, title II, Sec. 201, Sept. 2, 1958, 72 Stat. 1381;

amended Pub. L. 94-455, title XIX, Sec. 1906(b)(13)(A), Oct. 4, 1976, 90

Stat. 1834.)

27 CFR

Sec. 24.65 Claims for wine or spirits lost or destroyed in bond.

(a) Claim for remission of tax on spirits. All claims for remission

of tax required by this part, relating to the loss or destruction of

spirits in bond, will be filed with the appropriate TTB officer within

30 days of discovery of the loss. A claim filed under this paragraph

will set forth the following information:

(1) The name, registry number, and location of the distilled spirits plant which produced the spirits;

(2) The serial numbers of the containers from which the spirits were lost, the quantity lost from each, and the total quantity of spirits covered by the claim;

(3) The total amount of tax for which claim is filed;

(4) The date of the loss or destruction (or, if not known, the date

of discovery);

(5) The nature and cause (if known) of the loss will be stated

specifically and in sufficient detail to disclose all material facts and circumstances surrounding the loss;

(6) If lost in transit, the name of the carrier and the points

between which shipped; and

(7) If lost by theft, evidence establishing that the loss did not

occur as the result of negligence, connivance, collusion, or fraud on

the part of the proprietor, owner, consignor, consignee, bailee or

carrier, or the agents or employees of any of them.

(b) Claim for allowance of loss on wine. A claim for allowance of

loss required by this part, relating to the loss or destruction of wine

in bond, will be filed with the appropriate TTB officer. A claim for

allowance of loss for wine lost in transit, by fire or other casualty,

or any other extraordinary or unusual losses, including a loss by theft, will be filed immediately. Any other claim for allowance of loss will be attached to and submitted with the TTB F 5120.17, Report of Bonded Wine Premises Operations, for the reporting period in which the inventory required by Sec. 24.313 is taken or, in the case of discontinuance of the premises or change in proprietorship, to the final report filed. A claim filed under this paragraph will set forth the information required

by paragraphs (a)(5) to (a)(7) of this section and, in addition, will

set forth the following information:

(1) The original volume of wine which sustained the loss, the tax

class, the quantity of wine lost, and the percentage of wine lost;

(2) Where the claim covers losses sustained at bonded wine premises

during the tax year, the claimant shall state:

(i) The quantities of wine on hand at the beginning of the tax year, received in bond during the tax year, and produced during the tax year;

(ii) Where the percentage of loss is calculated separately by tax

class, the volume of wine by tax class; and

(iii) If effervescent wine is produced, the volume of wine produced

by fermentation in bottles, by artificial carbonation, and by bulk

processing; and

(3) Claims covering losses of wine during transit in bond will show

the volume lost from each container, the serial number, if any, and the

volume shipped.

(c) Claim for abatement, credit or refund. A claim for an abatement

of an assessment under Sec. 24.61, or credit or refund of tax which has been paid or determined, will be filed with the appropriate TTB officer in accordance with the provisions of this paragraph and the provisions of 27 CFR part 70, subpart F. A claim filed under this paragraph with respect to spirits, wine, or volatile fruit-flavor concentrate, will set forth the applicable information required by paragraphs (a) and (b) of this section. In addition, any claim filed under this paragraph will set forth the following information:

(1) The date of the assessment for which abatement is claimed; and

(2) The name, registry number, and address of the premises where the tax was assessed (or name, address, and title of any other person who was assessed the tax, if the tax was not assessed against the

proprietor).

(d) Indemnification or recompense. A claim filed under paragraph (a) or (b) of this section will specify whether the claimant has been or will be indemnified or recompensed for the spirits or wine lost and, if so, the amount and nature of indemnity or recompense and the actual

value of the spirits or wine, less the tax.

(e) Supporting documents. A claim filed under paragraph (a), (b), or (c) of this section will be supported by affidavits of persons having personal knowledge of the loss or destruction. In addition, if filed for tax on wine or spirits lost in transit, the claim will be supported by a copy of the carrier's bill of lading. (Sec. 201, Pub. L. 85-859, 72 Stat. 1323, as amended, 1381, as amended, 1382, as amended (26 U.S.C. 5008, 5370, 5373))

(Approved by the Office of Management and Budget under control numbers

1513-0053 and 1513-0088)

[T.D. ATF-299, 55 FR 24989, June 19, 1991, as amended by T.D. ATF-338,

58 FR 19063, Apr. 12, 1993; T.D. ATF-376, 61 FR 31030, June 19, 1996;

T.D. ATF-409, 64 FR 13683, Mar. 22, 1999]

Sec. 24.75 Wine for personal or family use.

(a) General. Any adult may, without payment of tax, produce wine for personal or family use and not for sale.

(b) Quantity. The aggregate amount of wine that may be produced

exempt from tax with respect to any household may not exceed:

(1) 200 gallons per calendar year for a household in which two or

more adults reside, or

(2) 100 gallons per calendar year if there is only one adult

residing in the household.

(c) Definition of an adult. For the purposes of this section, an

adult is any individual who is 18 years of age or older. However, if the locality in which the household is located has established by law a

greater minimum age at which wine may be sold to individuals, the term

``adult'' will mean an individual who has attained that age.

(d) Proprietors of bonded wine premises. Any adult, defined in Sec.

24.75(c), who operates a bonded wine premises as an individual owner or

in partnership with others, may produce wine and remove it from the

bonded wine premises free of tax for personal or family use, subject to

the limitations in Sec. 24.75(b).

(e) Limitation. This exemption should not in any manner be construed as authorizing the production of wine in violation of applicable State or local law. Except as provided in Sec. 24.75(d), this exemption does not otherwise apply to partnerships, corporations, or associations.

(f) Removal. Wine produced under this section may be removed from

the premises where made for personal or family use including use at

organized affairs, exhibitions or competitions, such as home winemaker's contests, tastings or judgings, but may not under any circumstances be sold or offered for sale. The proprietor of a bonded wine premises shall pay the tax on any wine removed for personal or family use in excess of the limitations provided in this section and shall also enter all quantities removed for personal or family use on TTB F 5120.17, Report of Bonded Wine Premises Operations. (Sec. 201, Pub. L. 85-859, 72 Stat. 1331, as amended (26 U.S.C. 5042))

(Approved by the Office of Management and Budget under control number

1513-0053)

[T.D. ATF-299, 55 FR 24989, June 19, 1991, as amended by T.D. ATF-338,

58 FR 19064, Apr. 12, 1993; T.D. ATF-344, 58 FR 40354, July 28, 1993]

Sec. 24.136 Procedure for alternating proprietors.

(a) General. Wine premises, or parts thereof, may be operated

alternately by proprietors who have each filed and received approval of

the necessary applications and bonds and have qualified under the

provisions of this part. Where operations by alternating proprietors are limited to parts of the wine premises, the application will describe areas, buildings, floors, or rooms which will be alternated and will be accompanied by a diagram delineating the parts of the wine premises to be alternated. A separate diagram will be submitted to depict each arrangement under which the wine premises will be operated. Once the qualifying documents have been approved, and operations initiated, the wine premises, or parts thereof, may be alternated. Any transfer of wine, spirits, or other accountable materials from one proprietor to the other proprietor will be indicated in the records and reports of each proprietor. Operation of a bonded winery engaged in the production of wine by an alternate proprietor will be at least one calendar day in length.

(b) Alternation. All operations in any area, building, floor, or

room to be alternated will be completely finished and all wine, spirits, and other accountable materials will be removed from the alternated wine premises or transferred to the incoming proprietor. However, wine, spirits, and other accountable materials may be retained in locked tanks at wine premises to be alternated and remain in the custody of the outgoing proprietor.

(c) Bonds. The outgoing proprietor who has filed bond and intends to resume operation of the alternated areas, buildings, floors, or rooms following suspension of operations by an alternating proprietor shall execute a consent of surety to continue in effect all bonds. Where wine, spirits, or other accountable materials subject to tax under 26 U.S.C. chapter 51 are to be retained in tanks on the wine premises to be alternated, the outgoing proprietor shall also execute a consent of surety to continue the liability of all bonds for the tax on the materials, notwithstanding the change in proprietorship.

(d) Records. Each proprietor shall maintain separate records and

submit a separate TTB F 5120.17, Report of Bonded Wine Premises

Operations. All transfers of wine, spirits, and other accountable

materials will be reflected in the records of each proprietor. Each

proprietor shall maintain a record showing the name and registry number

of the incoming or outgoing proprietor, the effective date and hour of

alternation, and the quantity in gallons and the percent alcohol by

volume or proof of any wine, spirits, or other accountable materials

transferred or received. (Sec. 201, Pub. L. 85-859, 72 Stat. 1378, as

amended, 1379, as amended, 1380, as amended, 1381, as amended, 1382, as

amended (26 U.S.C. 5351, 5352, 5354, 5356, 5361, 5362, 5363, 5367,

5373))

(Approved by the Office of Management and Budget under control numbers

1512-0058, 1513-0053 and 1513-0115)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by T.D. ATF-338,

58 FR 19064, Apr. 12, 1993]

Sec. 24.140 Notice.

(a) General. Where all or part of the operations at a wine premises

are to be permanently discontinued, the proprietor shall file with the appropriate TTB officer a notice in letter form to cover the discontinuance. The proprietor shall state in the notice the date on which operations will be discontinued and, if the wine premises are to be transferred to a successor proprietor, the name of the successor proprietor. Any basic permit issued to the proprietor under the Federal Alcohol Administration Act (49 Stat. 978; 27 U.S.C. 203) for the operation discontinued will be submitted to the appropriate TTB officer with a written request for cancellation.

(b) Bonded wine premises. The proprietor shall certify in the

notice, as applicable, that:

(1) All wine, spirits, or volatile fruit-flavor concentrate have

been lawfully removed from bonded wine premises, destroyed, or

transferred to a successor as of the effective date of discontinuance,

(2) No wine, spirits, or volatile fruit-flavor concentrate are in

transit to bonded wine premises, and

(3) All approved applications covering the transfer of spirits to

bonded wine premises have been returned to the appropriate TTB officer.

The proprietor shall submit a report marked ``Final'' on the TTB F

5120.17, Report of Bonded Wine Premises Operations. Any wine, spirits,

or volatile fruit-flavor concentrate transferred to a successor will be

identified as ``Transferred to successor'' on the report and identified

as ``Received from predecessor'' on the initial report filed by the

successor.

(c) Taxpaid wine bottling house premises or Taxpaid wine premises.

The proprietor shall certify in the notice that all taxpaid United

States or foreign wine on hand have been disposed of, or if not yet

disposed of, the manner of disposition and the time period in which the

disposition will occur. The proprietor shall include taxpaid United

States wine on the TTB F 5120.17 report marked ``Final.'' Any United

States taxpaid wine transferred to a successor will be identified as

``Transferred to successor'' on the report and identified as ``Received

from predecessor'' on the initial report filed by the successor. (Sec.

201, Pub. L. 85-859, 72 Stat. 1381, as amended (26 U.S.C. 5367))

(Approved by the Office of Management and Budget under control numbers

1512-0058 and 1513-0053)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by T.D. ATF-338,

58 FR 19064, Apr. 12, 1993; T.D. ATF-409, 64 FR 13683, Mar. 22, 1999]

Sec. 24.176 Crushing and fermentation.

(a) Natural wine production. Water may be used to flush equipment

during the crushing process or to facilitate fermentation but the

density of the juice may not be reduced below 22 degrees Brix. However,

if the juice is already less than 23 degrees Brix, the use of water to

flush equipment or facilitate fermentation is limited to a juice density reduction of no more than one degree Brix. At the start of fermentation no material may be added except water, sugar, concentrated fruit juice from the same kind of fruit, malo-lactic bacteria, yeast or yeast cultures grown in juice of the same kind of fruit, and yeast foods, sterilizing agents, precipitating agents or other approved fermentation adjuncts. Water may be used to rehydrate yeast to a maximum to two gallons of water for each pound of yeast; however, except for an operation involving the preparation of a yeast culture starter and must mixture for later use in initiating fermentation, the maximum volume increase of the juice after the addition of rehydrated yeast is limited to 0.5 percent. After fermentation natural wines may be blended with each other only if produced from the same kind of fruit.

(b) Determination of wine produced. Upon completion of fermentation

or removal from the fermenter, the volume of wine will be accurately

determined, recorded and reported on TTB F 5120.17, Report of Bonded

Wine Premises Operations, as wine produced. Any wine or juice remaining

in fermentation tanks at the end of the reporting period will be

recorded and reported on TTB F 5120.17.

[T.D. ATF-312, 56 FR 31078, July 9, 1990, as amended by ATF-338, 58 FR

19064, Apr. 12, 1993]

Sec. 24.197 Production by fermentation.

In producing special natural wine by fermentation, flavoring

materials may be added before or during fermentation. Special natural

wine produced by fermentation may be ameliorated in the same manner and

to the same extent as natural wine made from the same fruit. Spirits may not be added to special natural wine with the exception of spirits

contained in the natural wine used as a base or in authorized essences

made on bonded wine premises as provided in Sec. 24.86 or in approved

essences made elsewhere. Upon removal of the wine from fermenters, the

volume of liquid will be determined accurately and recorded as wine

produced. The quantity of liquid in fermenters at the close of each

reporting period will be reported on the TTB F 5120.17, Report of Bonded Wine Premises Operations. (Sec. 201, Pub. L. 85-859, 72 Stat. 1386, as amended (26 U.S.C. 5386))

(Approved by the Office of Management and Budget under control numbers

1513-0053 and 1513-0115)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by ATF-338, 58 FR

19064, Apr. 12, 1993]

Sec. 24.237 Spirits added to juice or concentrated fruit juice.

Juice or concentrated fruit juice to which spirits have been added

may not have an alcohol content exceeding 24 percent by volume. Although not considered to be wine, juice or concentrated fruit juice to which spirits have been added will be included in the appropriate tax class of any wine inventory and will be properly identified. Juice or concentrated juice to which wine spirits are added will be reported on the TTB F 5120.17, Report of Bonded Wine Premises Operations, as wine, but a separate record will be maintained. (Sec. 201, Pub. L. 85-859, 72 Stat. 1383, as amended (26 U.S.C. 5382))

(Approved by the Office of Management and Budget under control numbers

1513-0053 and 1513-0115)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by T.D. ATF-338,

58 FR 19064, Apr. 12, 1993]

Sec. 24.292 Exported wine.

(a) General. Wine may be removed from a bonded wine premises without payment of tax for exportation, for use on vessels and aircraft, for transportation to and deposit in a ``Class 6'' manufacturing bonded warehouse, for transfer to and deposit in a customs bonded warehouse, and for transfer to and deposit in a foreign-trade zone for exportation or for storage pending exportation. Removals of wine for export will be in accordance with the procedures in part 28 of this chapter.

(b) Return of wine to bonded storage. Wines which have been lawfully withdrawn, without payment of tax, under the provisions of part 28 of this chapter may be returned to bonded wine premises from which withdrawn for storage pending subsequent removal for lawful purposes. On return of wine to bonded wine premises, the proprietor shall record the receipt showing the gallonage of each tax class received and returned to storage on bonded wine premises and shall report the return on the TTB F 5120.17, Report of Bonded Wine Premises Operations for the reporting period with an explanatory notation. All provisions of this part applicable to wine in bond at bonded wine premises and to removals from bond are applicable to returned wine. (Sec. 201, Pub. L. 85-859, 72 Stat. 1380, as amended (26 U.S.C. 5362))

(Approved by the Office of Management and Budget under control numbers

1513-0053 and 1513-0115)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by T.D. ATF-338,

58 FR 19065, Apr. 12, 1993; T.D. TTB-8, 69 FR 3830, Jan. 27, 2004]

Sec. 24.293 Wine for Government use.

(a) General. Wine may be removed from bonded wine premises, free of

tax, for use of the Government of the United States, or any agency

thereof, upon receipt of a proper Government order signed by the officer in charge of the department, institution, station, or similar

establishment, to which the wine is to be shipped or other officer duly

authorized to sign the order. The governmental order will show the kind, quantity and alcohol content of the wine desired; and the purpose for which the wine is to be used. Wine may also be removed for use by the governments of the several states and the District of Columbia, or of any subdivision thereof, or by any agency of the governments, free of tax, from bonded wine premises for analysis, testing, research or

experimentation.

(b) Bill of lading and report of shipment. Where wine is shipped by

common carrier, the proprietor shall retain a copy of the bill of

lading, covering the shipment, with the TTB F 5120.17, Report of Bonded Wine Premises Operations for the reporting period in which the shipment is made. The bill of lading will show the name and address of the agency to which the wine is shipped, identifying marks on containers or cases, and alcohol content of the wine. The governmental order, or a copy of the order, will be filed at the bonded wine premises

available for inspection by appropriate TTB officers. (Sec. 201, Pub. L. 85-859, 72 Stat. 1380, as amended, 1381, as amended (26 U.S.C. 5362,

5367, 7510))

(Approved by the Office of Management and Budget under control numbers

1513-0053 and 1513-0115)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by T.D. ATF-312,

56 FR 31082, July 9, 1991; T.D. ATF-338, 58 FR 19065, Apr. 12, 1993;

T.D. ATF-409, 64 FR 13684, Mar. 22, 1999]

Sec. 24.294 Destruction of wine.

(a) General. Wine on bonded wine premises may be destroyed on or off wine premises by the proprietor without payment of tax. A proprietor who wants to destroy wine on or off wine premises must file with the appropriate TTB officer an application stating the kind, alcohol content, and approximate volume of wine to be destroyed, where the wine is to be destroyed, and the reason for destruction. Wine to be destroyed must be inspected, and the destruction supervised, by an appropriate TTB officer unless the appropriate TTB officer authorizes the proprietor to destroy the wine without inspection and supervision. The wine must not be destroyed until the proprietor has received authority from the appropriate TTB officer.

(b) Record of destruction. The proprietor shall maintain a record of the volume destroyed and include the quantity on the TTB F 5120.17,

Report of Bonded Wine Premises Operations. If part of the volume of the

material destroyed is not wine, the volume destroyed will be reported on the basis of actual wine content of the material, excluding any dilution by water or other substance. (Sec. 201, Pub. L. 85-859, 72 Stat. 1381, as amended (26 U.S.C. 5367, 5370))

(Approved by the Office of Management and Budget under control numbers

1513-0053 and 1513-0115)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by T.D. ATF-338,

58 FR 19065, Apr. 12, 1993; T.D. ATF-409, 64 FR 13686, Mar. 22, 1999]

Sec. 24.295 Return of unmerchantable wine to bond.

(a) General. Wine produced in the United States which has been

taxpaid, removed from bonded wine premises, and subsequently determined

to be unmerchantable may be returned to bonded wine premises for

reconditioning, reformulation or destruction. The tax paid on United

States wine may, when such wine is returned to bond, be refunded or

credited, without interest, to the proprietor of the bonded wine

premises to which such wine is delivered. However, no tax paid on any

United States wine for which a claim has been or will be made under the

provisions of 27 CFR Part 70, subpart G will be refunded or credited. If the tax on the United States wine has been determined but not paid, the person liable for the tax may, when such wine is returned to bond, be relieved of the liability. Claims for refund or credit, or relief from tax paid or determined on United States wine returned to bond are filed in accordance with Sec. 24.66.

(b) Receipt. The quantity of unmerchantable taxpaid United States

wine returned to bond is determined upon receipt on bonded wine

premises. The quantity determined will be entered on the TTB F 5120.17,

Report of Bonded Wine Premises Operations for the reporting period

during which the United States wine is returned.

(c) Records. The proprietor shall maintain records covering each lot of unmerchantable taxpaid wine returned to bond in accordance with Sec. 24.312. (Sec. 201, Pub. L. 85-859, 72 Stat. 1332, as amended, 1382, as amended (26 U.S.C. 5044, 5371))

(Approved by the Office of Management and Budget under control numbers

1513-0053, 1513-0115 and 1513-0088)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by T.D. ATF-312,

56 FR 31082, July 9, 1991; T.D. ATF-338, 58 FR 19065, Apr. 12, 1993;

T.D. ATF-344, 58 FR 40354, July 28, 1993; T.D. ATF-376, 61 FR 31030,

June 19, 1996]

Sec. 24.300 General.

(a) Records and reports. A proprietor who conducts wine operations

shall maintain wine transaction records and submit reports as required

by this part. Transaction records may be recorded in wine gallons or in

liters. However, required reports will show wine volumes in wine

gallons. The equivalent wine gallons of wine bottled or packed and

labeled according to metric measure will be determined using the

following conversion factors:

(1) Per case. Equivalent gallonage may be determined using the

following conversion factors for cases of metric bottles:

------------------------------------------------------------------------

Bottles Equivalent

per case Net content each bottle gallonage

------------------------------------------------------------------------

120 50 mL............................................. 1.58502

60 100 mL............................................ 1.58502

48 187 mL............................................ 2.37119

24 375 mL............................................ 2.37753

12 750 mL............................................ 2.37753

12 1 liter........................................... 3.17004

6 1.5 liter......................................... 2.37753

4 3 liter........................................... 3.17004

------------------------------------------------------------------------

(2) Per liter. Equivalent gallonage may be determined by multiplying total liters by a conversion factor of 0.26417 gallons per liter.

(b) Time of making entries. Any operation or transaction is to be

entered in records or commercial papers at the time the operation or

transaction occurs, except that where records are posted from source

records or from supplemental auxiliary records prepared at the time the

operation or transaction occurs, entries in another record may be

deferred to not later than the close of business of the third business

day succeeding the day on which the operation or transaction occurs. The proprietor shall retain all source records and all supplemental or

auxiliary records which support entries in other records or commercial

papers in order to facilitate verification of operations by appropriate TTB officers. Source records and supplemental or auxiliary records may be used as a record of an operation or transaction and to prepare the TTB F 5120.17, Report of Bonded Wine Premises Operations, provided the record will readily allow for verification of an operation or transaction by appropriate TTB officers.

(c) Prescribed forms. All reports required by this part must be

submitted on forms prescribed by Sec. 24.20. Entries will be made as

indicated by the headings of the columns and lines, and as required by

the instructions for the form. Report forms are furnished free of cost.

(d) Period of retention. All prescribed returns, reports and records (including source records) will be retained by the proprietor for a period of not less than three years from the record date or the date of the last entry required to be made in the record, whichever is later. However, the appropriate TTB officer may require records to be kept an additional period not exceeding three years in any case where retention is determined to be necessary.

(e) Data processing. (1) Notwithstanding any other provision of this section, data maintained on data processing equipment may be kept at a location other than the wine premises if the original operation or

transaction source records required by this subpart are kept available

for inspection at the wine premises.

(2) Data which has been accumulated on cards, tapes, discs, or other accepted recording media will be retrievable within five business days.

(3) The applicable data processing program will be made available

for examination if requested by an appropriate TTB officer.

(f) Photographic copies of records. The proprietor may record, copy, or reproduce records required by this part and may use any process which accurately reproduces the original record and which forms a durable medium for reproducing and preserving the original record. Whenever records are reproduced under this section, the reproduced records will be preserved in conveniently accessible files, and provisions will be made for examining, viewing and using the reproduced record the same as if it were the original record, and it will be treated and considered for all purposes as though it were the original record. All provisions of law and regulations applicable to the original are applicable to the reproduced record. As used in this paragraph, ``original record'' means the record required to be maintained or preserved by the proprietor, even though it may be an executed duplicate or other copy of the document.

(g) F 5120.17, Report of Bonded Wine Premises Operations. A

proprietor who conducts bonded wine premises operations must complete

and submit a F 5120.17 in accordance with the instructions on the form.

(1) Monthly report. The proprietor must submit F 5120.17 on a

monthly basis, except as otherwise provided in paragraph (g)(2) or

(g)(3) of this section.

(2) Quarterly or annual report. (i) General. A proprietor may file a completed F 5120.17 on a quarterly or annual basis if the proprietor

meets the criteria in paragraph (g)(2)(ii) or (g)(2)(iii) of this

section. To begin the quarterly or annual filing of a report of bonded

wine premises operations, a proprietor must state the intent to do so in the ``Remarks'' section when filing the prior month's F 5120.17. A

proprietor who is commencing operations during a calendar year and

expects to meet these criteria may use a letter notice to the

appropriate TTB officer and file F 5120.17 quarterly or annually for the remaining portion of the calendar year. If a proprietor becomes

ineligible for quarterly or annual filing by exceeding the applicable

tax liability or activity limit, the proprietor must file F 5120.17 for

that month and for all subsequent months of the calendar year. If there

is a jeopardy to the revenue, the appropriate TTB officer may at any

time require any proprietor otherwise eligible for quarterly or annual

filing of a report of bonded wine premises operations to file such

report monthly.

(ii) Eligibility for quarterly report filing. In order to be

eligible to file F 5120.17 on a quarterly basis, the proprietor must be

filing quarterly tax returns under Sec. 24.271, and the proprietor

must not expect the sum of the bulk and bottled wine to be accounted for in all tax classes to exceed 60,000 gallons for any one quarter during the calendar year when adding up the bulk and bottled wine on hand at the beginning of the month, bulk wine produced by fermentation,

sweetening, blending, amelioration or addition of wine spirits, bulk

wine bottled, bulk and bottled wine received in bond, taxpaid wine

returned to bond, bottled wine dumped to bulk, inventory gains, and any

activity written in the untitled lines of the report form which

increases the amount of wine to be accounted for.

(iii) Eligibility for annual report filing. In order to be eligible

to file F 5120.17 on an annual basis, the proprietor must be filing

annual tax returns under Sec. 24.273, and the proprietor must not

expect the sum of the bulk and bottled wine to be accounted for in all

tax classes to exceed 20,000 gallons for any one month during the

calendar year when adding up the bulk and bottled wine on hand at the

beginning of the month, bulk wine produced by fermentation, sweetening,

blending, amelioration or addition of wine spirits, bulk wine bottled,

bulk and bottled wine received in bond, taxpaid wine returned to bond,

bottled wine dumped to bulk, inventory gains, and any activity written

in the untitled lines of the report form which increases the amount of

wine to be accounted for.

(3) No reportable activity. A proprietor who files a monthly F

5120.17 and does not expect an inventory change or any reportable

operations to be conducted in a subsequent month or months may attach to the filed F 5120.17 a statement that, until a change in the inventory or a reportable operation occurs, a F 5120.17 will not be filed.

(Sec. 201, Pub. L. 85-859, 72 Stat. 1381, as amended (26 U.S.C. 5367,

5555))

(Approved by the Office of Management and Budget under control numbers

1513-0053 and 1513-0115)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by T.D. ATF-338,

58 FR 19065, Apr. 12, 1993; T.D. ATF-409, 64 FR 13683, 13684 and 13686,

Mar. 22, 1999; T.D. TTB-41, 71 FR 5603, Feb. 2, 2006]

Sec. 24.303 Formula wine record.

A proprietor who produces beverage formula wine shall maintain

records showing by transaction date the details of production. The

formula wine record will contain the following:

(a) A number for each lot produced;

(b) The approved formula number for each lot;

(c) The volume of wine used in the production;

(d) The volume produced and the gain or loss resulting from the

production of each lot as determined by comparing the volume finished

with the volume used (report the total loss or gain on the TTB F 5120.17 for the period in question);

(e) An explanation of any unusual loss or gain;

(f) The production of essences showing the formula number,

quantities of spirits and herbs used, and the amount produced;

(g) The quantity of essences purchased, and the use, transfer or

other disposition of essences produced or purchased; and

(h) A record of the receipt and use or other disposition of all

herbs, aromatics, essences, extracts, or other flavoring materials used

in the production of formula wine. (Sec. 201, Pub. L. 85-859, 72 Stat.

1381, as amended (26 U.S.C. 5367))

(Approved by the Office of Management and Budget under control numbers

1512-0059, 1513-0053 and 1513-0115)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by T.D. ATF-338,

58 FR 19065, Apr. 12, 1993]

Sec. 24.313 Inventory record.

A proprietor who files monthly or quarterly reports shall prepare a

record of the physical inventory of all wine and spirits in storage at

the close of business for each tax year, or where a different cycle has

been established, the inventory will be taken at the end of that annual

period. Such proprietors may use an annual inventory period different

from the period beginning July 1 and ending June 30 by submitting a

notice to the appropriate TTB officer. However, proprietors who file

quarterly reports must select an annual inventory period that begins on

the first day of a calendar quarter. Proprietors who file reports on a

calendar year basis under the provisions of Sec. 24.300(g) of this part shall take the physical inventory at the close of the calendar year. The inventory record will be retained on file with the proprietor's TTB F 5120.17, Report of Bonded Wine Premises Operations, for the reporting period when the inventory was taken. If a proprietor who files monthly reports takes a complete inventory at other times during the year, losses disclosed will be reported on the TTB F 5120.17 and the inventory record will be maintained on file with the report for each month when an inventory was taken. The proprietor's inventory record will include:

(a) Description of wine. (1) State the generic name (e.g., port,

claret) or designate as a white, rose or red table or dessert wine; or

(2) Wine intended to be marketed with a vintage date, varietal name, or geographical designation will be appropriately identified, e.g., 1977 Napa Valley Pinot Noir; and

(3) If the wine is other than grape wine, state the type, e.g.,

orange, honey.

(b) Bulk containers. Tanks containing wine will be listed by tank

number. Bulk containers which are barrels or puncheons containing the

same kind of wine may be summarized, e.g., 10 barrels--red table wine

500 gals.;

(c) Cases, bottles and other similar containers. The total volume of one kind of wine in cases, bottles and similar containers may be entered as one item and appropriately identified;

(d) Inventory summary. The volume of bulk and bottled or packed wine will be totaled separately in wine gallons or in liters, by tax class, and reported on the TTB F 5120.17. Spirits will also be totaled and reported on the TTB F 5120.17; and

(e) Inventory record. All inventory pages will be numbered

consecutively and the last inventory page will be dated and signed after the statement, ``Under penalties of perjury, I declare that I have examined this inventory record and to the best of my knowledge and belief, it is a true, correct and complete record of all wine and spirits required to be inventoried.'' (Sec. 201, Pub. L. 85-859, 72 Stat. 1381, as amended (26 U.S.C. 5367, 5369))

(Approved by the Office of Management and Budget under control numbers

1513-0053 and 1513-0115)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by T.D. ATF-338,

58 FR 19065, Apr. 12, 1993; T.D. ATF-409, 64 FR 13683, Mar. 22, 1999;

T.D. TTB-41, 71 FR 5603, Feb. 2, 2006]

Sec. 24.316 Spirits record.

A proprietor who receives, stores, or uses spirits shall maintain a

record of receipt and use. The record will show the date of receipt,

from whom received, and the kind and proof gallons. The spirits record

will also show by date and proof gallons the spirits used or removed

from bonded wine premises and to whom. The proof gallons of spirits

received, used, removed from bonded wine premises, and on hand will be

summarized and the account balanced at the end of each reporting period

and reported on the TTB F 5120.17. (Sec. 201, Pub. L. 85-859, 72 Stat. 1381, as amended, 1382, as amended, 1383, as amended (26 U.S.C. 5367, 5373))

(Approved by the Office of Management and Budget under control numbers

1513-0053 and 1513-0115)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by T.D. ATF-312,

56 FR 31083, July 9, 1991; T.D. ATF-338, 58 FR 19065, Apr. 12, 1993]

Sec. 28.126 Proprietor's report.

The records of the proprietor of the bonded wine cellar shall

reflect the quantity of wine removed without payment of tax under this

subpart, and he shall report the quantity of wine so removed on TTB F

5120.17.

(72 Stat. 1380; 26 U.S.C. 5362)

[25 FR 5734, June 23, 1960. Redesignated at 40 FR 16835, Apr. 15, 1975,

and amended by T.D. ATF-299, 55 FR 25033, June 19, 1990; T.D. TTB-8, 69

FR 3833, Jan. 27, 2004]