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Accounting for leftover spirits in processing/bottling


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Hey y'all,

I've been trying to figure this out. At the end of bottling runs, i sometimes have several proof gallons left over of a spirit. I can't figure out the proper way to send gauged proof gallons back to storage. It seems that I either have to send them back to production for 'redistilling', or possibly hold them in the processing account until the next time that I bottle.

I'm talking about aged spirits that have been transferred to processing, proofed down to 80 proof, and are left over after a bottling run. I try to get as precise as possible when transferring barrel proof spirits to processing, but sometimes end up with more than I wish to bottle. Why can't these be dumped back into storage?

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Here is the rule that prevents doing what you would like to do:

Sec. 19.351 Removals from processing.

(a) Method of removal. A proprietor may remove spirits or wines from the processing account in any approved bulk container, by pipeline, or in bulk conveyances in compliance with the provisions of this part. Spirits may be bottled and cased for removal.
(B) Authorized removals from processing. A proprietor may remove from processing:
(1) Spirits, upon tax determination or withdrawal under 26 U.S.C. 5214 or 26 U.S.C. 7510;
(2) Spirits, to the production account at the same plant for redistillation;
(3) Bulk spirits, by transfer in bond to production or processing account at another distilled spirits plant for redistillation or further processing;
(4) Spirits or wines, for authorized voluntary destruction; or
(5) Wines, by transfer in bond to a bonded wine cellar or to another distilled spirits plant. However, wine may not be removed from the bonded premises of a distilled spirits plant for consumption or sale as wine.
© Exception. Except as provided in paragraph (B)(2) and (3) of this section, spirits may not be transferred from the processing account to the storage account. [All of the emphasis is mine.]

So, although Section Sec. 19.322 allows you to "receive bulk spirits into the storage account .. by return to bulk storage," that appears to be limited, by 19.351,to instances in which the return is preparatory to redistillation or a removal in bond.

The answer to your question, then, :"You can't because they say you can't." The "why" of "whydo they say you can't" is a mystery that I'm not about to tackle.

If you want to do differently, apply for a variance that would allow you to do it. I've got no idea if TTB would approve.

Without a variance, the bulk leftovers become part of the on hand end of month in bulk ingredients section of the monthly report of processing operations, get carried forward in that account into the on hand first of month figures for the next month, and hang around until you make some disposition of them that is captured in lines 9 to 24 of the bulk ingredients section of the processing report.

Note that we are dealing with accounts here. Here hold spirits in accounts. There is no requirement that you keep containers that have spirits that are accounted for in storage separate and apart from spirits that are accounted for processing. The individual containers must be marked in a way that the records will establish what is in processing and what is in storage. TTB may not like that answer, but there is nothing in the regulations that requires that sort of physical segregation. Just don't put spirits from two accounts into the same container! I would guess that the question that you want to ask is why you can't return them to storage and mix them? To that the answer is, again, because TTB says so!

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First of all, Dave Dunbar is the man, everything I know is based upon his help....

To agree with him, I do not think bottling excess can go straight into 'storage'...

I either leave it in 'processing'(personally, I have mostly only used this for filled bottles though):

5110.28 - 46 (B) "On Hand End of Month"

(and next month it appears in 27(B) "ON HAND"

Or I send it back to 'production'

5110.28, part 1, 20 © "USED FOR REDISTILLATION"

( do not record it in the 5110.40 Production form except at end of quarter for "17. PHYSICAL INVENTORY- END OF CALENDAR QUARTER"

I suppose with barrel aged spirits like you have, you may want to send it back to some form of 'storage', but you could be putting it an another container and 'mingling', so maybe have to send it back to production, then to storage... but you may have fun proving an age statement...

I would ask the legality of just not taking that amount to the processing account on paper to begin with.. Can the spirits be reduced to bottling proof and transferred from the barrel to a storage tank while still in 'storage'? if so, then only take to 'processing' what you use to bottle ( including your losses in 24©)


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The scenario for Sorghumrunner, the appropriate line number for "On Hand End Of Month" should be line 25 for Report 5110.28 which is for bulk spirits. In his case this would be for what was left over from his bottling run. Line 46 is for Finished or Packaged Products.

- Shawn

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Thanks guys, that is helpful to clear it up. I like the second suggestion, that product is proofed to bottling strength in storage, then only what is sent to the bottler enters into processing. Therefore what is leftover stays in storage and goes back to a barrel comingled with other product in the same account. Does that follow guidelines DHDunbar?

If not, then having 2-5 PG that stay in Processing not commingled with storage spirits would work, though I couldn't keep them in a barrel.

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