SEC. 4. DISTILLED SPIRITS PLANTS.

Section 5178(a) is amended by adding the following new paragraph after paragraph (4):

`(5) BONDED DEALER OPERATIONS- Any person establishing a distilled spirits plant to conduct operations as a bonded dealer may, as described in the application for registration--

`(A) store distilled spirits in any approved container on the bonded premises of such plant, and

`(B) under such regulations as the Secretary shall prescribe, store taxpaid distilled spirits, beer and wine and such other beverages and items (products) not subject to tax or regulation under this title on such bonded premises.'

SEC. 5. BONDED DEALERS.

(a) Section 5002(a) is amended by inserting after subsection (a)(15) the following new paragraphs:

`(16) BONDED DEALER- The term `bonded dealer' means any person who has elected under section 5011 to be treated as a bonded dealer.

`(17) CONTROL STATE ENTITY- The term `control State entity' means a State or a political subdivision of a State in which only the State or a political subdivision thereof is allowed under applicable law to perform distilled spirit operations, or any instrumentality of such a State or political subdivision.'

(b) Subpart A of part I of subchapter A of chapter 51 (relating to distilled spirits) is amended by adding at the end thereof the following new section:

`SEC. 5011. ELECTION TO BE TREATED AS BONDED DEALER.

`(a) ELECTION- Any wholesale dealer, or any control State entity, may elect, at such time and in such manner as the Secretary shall prescribe, to be treated as a bonded dealer if such wholesale dealer or entity sells bottled distilled spirits exclusively to a wholesale dealer in liquor, to an independent retail dealer subject to the limitation set forth in subsection (b), or to another bonded dealer. Except in the case of a control State entity, this election is not available to a retail dealer in liquor. This election is not available to any person with gross receipts from

the sale of distilled spirits, in the 12-month period prior to making such election, of less than $5,000,000 (applying the rules of section 5061(e)(3)).

`(b) SPECIAL RULES- (1) Any person, other than a control State entity, who is a bonded dealer shall not be considered as selling to an independent retail dealer if the bonded dealer has a greater than 10 percent ownership interest in, or control of the retail dealer; the retail dealer has a greater than 10 percent ownership interest in, or control of the bonded dealer; or where any person has a greater than 10 percent ownership interest in, or control of both the bonded and retail dealer. For purposes of this subparagraph, ownership interest, not limited to stock ownership, shall be attributed to other persons in the manner prescribed by section 318.

`(2) In the case of any control State entity, subsection (a) shall be applied without regard to the word `independent'.