[Code of Federal Regulations]
[Title 27, Volume 1]
[Revised as of April 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 27CFR24.266]

[Page 584-585]
 
            TITLE 27--ALCOHOL, TOBACCO PRODUCTS AND FIREARMS
 
 CHAPTER I--BUREAU OF ALCOHOL, TOBACCO AND FIREARMS, DEPARTMENT OF THE 
                                TREASURY
 
PART 24--WINE--Table of Contents
 
                        Subpart M--Losses of Wine
 
Sec. 24.266  Inventory losses.

    (a) General. The proprietor shall take a physical inventory of all 
untaxpaid wine on-hand on bonded wine premises as of the close of 
business each tax year, or where a cycle different from the tax year has 
been established as provided in Sec. 24.313, the inventory will be taken 
annually at the end of that cycle, or at any time required by an ATF 
officer. The physical inventory of bulk and bottled or packed wine will 
be recorded and reported as required by Sec. 24.313.
    (b) Bulk wine losses. The physical inventory of bulk wine will 
determine losses due to spillage, leakage, soakage, evaporation, and 
other losses normally occurring from racking and filtering since the 
previous physical inventory required by this section. A claim for 
allowance of loss, under the provisions of Sec. 24.65, is required for 
inventory losses in production or storage:
    (1) Where there are circumstances indicating that all or a part of 
the wine reported lost was unlawfully removed, or
    (2) Where the loss on bonded wine premises during the annual period 
exceeds three percent of the aggregate volume of wine on-hand at the 
beginning of the annual period and the volume of wine received in bond 
during the annual period; or the loss exceeds six percent of the still 
wine produced by fermentation; or the loss exceeds six percent of the 
sparkling wine produced by fermentation in bottles; or the loss exceeds 
three percent of the special natural wine produced under Sec. 24.195 or 
other wine produced under Sec. 24.218; or the loss exceeds three percent 
of the artificially carbonated wine produced; or the loss exceeds three 
percent of the bulk process sparkling wine produced.

The percentage applicable to each tax class of wine will be calculated 
separately, unless the calculation is impracticable because of the 
mixture of different tax classes by addition of wine spirits or blending 
during the annual period, in which case the percentage will be 
calculated on the aggregate volume. Wine removed immediately after 
production for use as distilling material and on which the usual 
racking, clarifying, and filtering losses are not sustained, will not be 
included in the calculations.
    (c) Bottle and other container wine losses. Wine filled into a 
bottle or other similar containers are not subject to losses due to 
spillage, leakage, soakage, evaporation, and other losses normally 
occurring from racking and filtering. In addition, wine that has been 
filled into a bottle or other similar containers can be accurately 
accounted for and any unexplained shortage is considered evidence of an 
unreported removal. Therefore, the proprietor

[[Page 585]]

shall pay the tax on any unexplained loss of untaxpaid bottled or packed 
wine disclosed by inventory or otherwise. (Sec. 201, Pub. L. 85-859, 72 
Stat. 1381, as amended (26 U.S.C. 5367, 5369, 5370))

(Approved by the Office of Management and Budget under control number 
1512-0492)

[T.D. ATF-299, 55 FR 24989, June 19, 1990, as amended by T.D. ATF-312, 
56 FR 31082, July 9, 1991]