SECTION 4. APPLICATION OF

CHASSIS AND BODY DEFINITIONS TO SECTION 4052(f)(1)

Section 4052(f)(1) provides that an article taxed under § 4051(a)(1) is not treated as manufactured or produced solely by reason of repairs or modifications to the article if the cost of the repairs and modifications does not exceed 75 percent of the retail price of a comparable new article. The safe harbor provision in § 4052 (f)(1) applies only to a § 4051(a)(1) article that has been previously taxed. See § 4052 (f)(2). The § 4051(a)(1) articles are: truck chassis and bodies, truck trailer and semitrailer chassis and bodies, and highway tractors. Therefore, a taxpayer must repair or modify one of the seven articles identified in § 4051(a)(1) in order to use the safe harbor provision in § 4052(f)(1).

For purposes of § 4052(f)(1), the IRS will use the definitions of chassis and body in Section 3 of this notice to determine the threshold issue of whether a § 4051(a)(1) article has been repaired or modified. In other words, the § 4052(f)(1) safe harbor provision may be applied to a chassis or body only if the chassis or body being repaired or modified is identifiable as such within the meaning of Section 3 of this notice.