Schneider National Leasing Inc v. United States, 1:17-cv-00672

Schneider National Leasing, Inc. (SNL) purchased 982 glider kits and used 982 of its previously purchased "donor" tractors in a Refurbishment Process (2003–2013) to assemble tractors leased to its parent Schneider.
912 kits were "powered" (included remanufactured engines); 70 were non-powered. Donor tractors originally had §4051 tax paid when first purchased.
The outfitters harvested usable parts (mostly transmissions, driveline, rear axles/hubs) from donors, recycled or sold remaining parts, and the resulting tractors were titled/identified using the glider kit serial numbers (new VINs).
IRS assessed $9,387,403.73 (plus interest) under 26 U.S.C. §4051 on 976 refurbished tractors (all 912 powered-glider tractors and 64 non-powered ones), concluding §4052(f) did not apply or costs exceeded 75% of a comparable new tractor's retail price.
Court previously held (partial summary judgment) that "retail price of a comparable new article" excludes any federal excise tax under §4051; remaining disputes were: (1) whether §4052(f) applies to powered-glider tractors, and (2) how to calculate "retail price" for §4052(f).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §4052(f) safe harbor applies to tractors assembled with powered glider kits	SNL: the Refurbishment Process is a repair/modification covered by §4052(f); only cost comparison matters (math-based safe harbor).	U.S.: the process produced new/different tractors (donor units were destroyed); not repairs/modifications, so §4052(f) inapplicable.	Held: §4052(f) does not apply to the 912 powered-glider tractors because the donor tractors were not repaired or modified but effectively replaced/converted into new tractors.
Proper measure of "retail price of a comparable new article" under §4052(f)	SNL: use an industry retail benchmark (e.g., Truck Blue Book) or market retail price, not SNL's discounted purchase price.	U.S.: use the actual price SNL paid for comparable new tractors (the first retail sale price SNL paid).	Held: "Retail price" is the price paid at the first retail sale — here, the (discounted) price SNL actually paid for comparable new Freightliner tractors.
Timeliness of IRS assessments under §6501(e)(3)	(Parties agreed certain quarters were timely; remainder depends on whether unpaid tax >25% of gross income.)	Same	Held: Court deferred ruling; timeliness for remaining quarters to be determined after parties compute taxes owed under the court's rulings.

Boise Nat’l Leasing, Inc. v. United States, 389 F.2d 633 (9th Cir. 1968) (illustrative of difficult repair-vs.-manufacture line)
Ruan Financial Corp. v. United States, 976 F.2d 452 (8th Cir. 1992) (similar treatment of refurbishment/manufacture distinction)
River Rd. Hotel Partners, LLC v. Amalgamated Bank, 651 F.3d 642 (7th Cir. 2011) (statutory interpretation methodology—plain meaning/context)
Robinson v. Shell Oil Co., 519 U.S. 337 (U.S. 1997) (plain-meaning statutory interpretation principal)
Kasten v. Saint–Gobain Performance Plastics Corp., 563 U.S. 1 (U.S. 2011) (contextual reading of statutory language)
Stinson Estate v. United States, 214 F.3d 846 (7th Cir. 2000) (tax exemptions construed narrowly; burden on taxpayer)
First Chicago NBD Corp. v. Comm’r, 135 F.3d 457 (7th Cir. 1998) (revenue rulings receive limited deference)
Bankers Life & Cas. Co. v. United States, 142 F.3d 973 (7th Cir. 1998) (revenue rulings entitled to less weight than regulations)
Commissioner v. Disston, 325 U.S. 442 (U.S. 1945) (tax exemptions are matters of legislative grace; taxpayer bears burden)
RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639 (U.S. 2012) (affirming principles of statutory reading cited by the court)