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Rum Cake & the TABC


TuftedTurtle

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Hey Everyone!

My business partners and I have submitted out TTB paperwork a couple months ago and are getting everything else in order.  We will be making rum and have access to some great baking equipment, so we are debating making and sell Rum Cake as an additional item.  In Texas we are able to sell on site up to a legal limit.  My question is, if we use our rum to make cake, does that alley to the limit?  The alcohol is baked out of the cake, so is that destroyed product?  If so, are we taxed on it?  Anyone using their spirits to make a food item?

Any advice or ideas are welcome.

Thanks,

Turtle

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Don't know the specifics of Texas law, but from the fed point of view, if the Rum Cake is a non-alcoholic product (and the way you describe it, it is), then you can not make that a product of the distillery. It has to be produced in a different facility. Which means the rum for the cake has been "sold" to someone (even if yourself), and then you must pay tax on it, both federal and state. Now, if that is "sold" as retail from your premise, then I believe it would be treated by most states as part of your limit, because the Rum Cake can not actually be a distillery product. But I don't know that for sure, and I suspect that the Texas law may not speak directly to that. We have used our spirits to make food items (Illinois), we treat the product as having been sold at retail, and federal and state taxes are paid.

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