Owner vs. modifier: FET liability when non-taxable chassis is converted to taxable

May 3, 2019
Rose-Michele Nardi
Baker & Miller PLLC
We purchased a non-taxable truck chassis. Prior to reselling the vehicle, we plan to have an unrelated entity perform slight modifications to it. Assuming the modifications convert the original chassis into a taxable one, are we or the modifier responsible for the tax under Internal Revenue Code (IRC) 4051? Is the tax limited to the cost of the modifications?
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