In short: TTB Form 5110.40 is the monthly federal report where distilleries record raw materials mashed and bulk spirits distilled. This TTB Form 5110.40: a plain-English guide to the production report explains how to calculate proof gallons, log grain usage, and transfer finished spirits to your storage or processing accounts.
Navigating federal compliance can feel overwhelming, which is why we created this TTB Form 5110.40: a plain-English guide to the production report. If you operate a distilled spirits plant, this mandatory document is where you record the raw materials mashed and the resulting bulk spirits distilled during the month. The production report strictly tracks the creation of raw alcohol. It does not cover barrel aging, bottling, or the final payment of federal excise tax. By understanding exactly what goes into this report, distillery owners and operations staff can build accurate recordkeeping habits that prevent regulatory headaches down the road.
Please note that this article provides general educational information and does not constitute tax or legal advice. Always consult current guidance from the Alcohol and Tobacco Tax and Trade Bureau.
Why does the TTB separate production from storage and processing?
To understand the production report, you first need to understand how the federal government views a distilled spirits plant. The Alcohol and Tobacco Tax and Trade Bureau divides distillery operations into three distinct accounts. These are Production, Storage, and Processing.
Under Title 27 of the Code of Federal Regulations, every drop of spirit must live in one of these three accounts. The production account is the starting point. This is where raw materials like corn, rye, malted barley, or molasses are fermented and run through the still to become alcohol. The production account is essentially your active manufacturing phase.
Once the spirit is distilled and collected in a receiver tank, it must be officially transferred out of the production account. If you are putting the spirit into barrels to age, it moves to the storage account. If you are cutting it with water to bottle immediately, it moves to the processing account. TTB Form 5110.40 only cares about the first step. It is the ledger that proves exactly how much grain you used and exactly how much new make spirit you created.
What goes into TTB Form 5110.40: a plain-English guide to the production report
The form itself is divided into sections that track your inputs and your outputs. You can find the most current version of the form on the official TTB Forms page. The document is submitted monthly, typically by the 15th day of the following month.
The first major section tracks the materials you used to produce spirits. This is where you will log your grain bill, fruit, molasses, or other fermentables. The TTB requires you to report grain in pounds and liquids in gallons. If you run a bourbon distillery, you will weigh your milled corn, rye, and barley, and record the total pounds mashed during that month. Accuracy here is critical because the TTB uses these numbers to check your yield. If you claim to have used ten pounds of corn but produced a thousand gallons of alcohol, the math will flag a major discrepancy in your operation.
The second major section tracks the actual spirits you produced. This section categorizes the alcohol by class and type. You must separate your production into columns based on what the spirit is legally defined as. For example, whisky, neutral spirits, and rum all have their own designated spaces.
How do you calculate proof gallons for your production report?
One of the most common stumbling blocks for new distillery staff is the requirement to report all spirit volumes in proof gallons rather than standard liquid gallons. When you fill out your production totals, you cannot simply look at the sight glass on your receiver tank and write down the liquid volume.
A proof gallon is a standardized unit of measurement that equals one liquid gallon of spirits at 100 proof, or 50 percent alcohol by volume. Federal excise tax scales with the alcohol content of the spirit, so the government mandates that all tracking be standardized to this 100 proof baseline.
To calculate a proof gallon, you multiply the actual liquid volume in wine gallons by the true proof of the spirit, and then divide by 100. For example, if you distill 100 liquid gallons of new make whiskey and gauge it at 120 proof, you multiply 100 by 120 to get 12000. You then divide by 100 to arrive at 120 proof gallons. You can also speed up your daily math by running the numbers through a TTB gauging calculator before logging your daily runs.
Because temperature affects the density of alcohol, you must always correct your proof readings for temperature using official TTB gauging tables. A spirit that reads 120 proof at 80 degrees Fahrenheit is actually a lower proof when corrected to the standard 60 degrees Fahrenheit. Accurate gauging is a strict federal requirement before any spirit is removed from the production account.
When do spirits leave the production account?
The production report also tracks withdrawals. Since spirits cannot sit in the production account indefinitely, you must log where they go next. The third section of the form is dedicated to these transfers.
Most craft distilleries will log a withdrawal transferred to storage or transferred to processing. When you pump your new make bourbon from the receiver tank into oak barrels and roll them into the rickhouse, you log that volume as a transfer to the storage account. On your paperwork, this exact volume will then appear as a deposit on your separate monthly storage report. The two reports must mirror each other perfectly. The amount leaving production must equal the amount entering storage.
If you are making a product like vodka or gin that does not require barrel aging, you will likely transfer the spirit directly to the processing account for filtering, dilution, and bottling. Again, the volume removed from production must match the volume deposited into processing. Proper cutoff procedures at the end of the month are vital. You must pick a consistent time, usually the last day of the month, to gauge your tanks and finalize these transfers so your reports stay synchronized.
What are the most common reporting errors?
Even experienced distillery operators make mistakes on their monthly reports. According to real-world discussions among craft distillers, the most frequent errors usually involve simple math or timing issues.
The most common mistake is confusing wine gallons with proof gallons. It is incredibly easy to read a flow meter, write down the liquid gallons, and accidentally enter that number on the TTB form. Always double check that your final production numbers have been correctly converted to proof gallons.
Another frequent issue is a mismatch between accounts. If you transfer 500 proof gallons out of production on the last day of the month, you must remember to log those same 500 proof gallons as entering the storage or processing account on those respective reports. When these numbers fail to align, it triggers red flags in the federal reporting system.
Finally, many new distillery owners forget to file when their stills are quiet. You must file a monthly operations report as a zero report even before you produce anything, and during any subsequent month where no production occurs. If your federal basic permit is active, your reporting obligation is active. Failing to file zero reports can lead to compliance audits and inquiries.
How can modern software simplify monthly compliance?
Managing federal compliance by hand using spreadsheets is a heavy administrative burden that steals valuable time away from distilling and building your brand. Calculating accurate proof gallons, tracking grain usage, and ensuring your production, storage, and processing accounts always balance perfectly requires meticulous daily attention.
Spirit Sight helps distilleries eliminate these headaches entirely. By using purpose-built TTB reporting software, operators can simply log their daily mashing and distillation activities, and the platform automatically calculates the correct proof gallons and handles the account transfers in the background. When the end of the month arrives, your numbers are already verified, balanced, and ready to submit, giving you total confidence in your federal compliance.
Key takeaways
- The production report tracks the initial creation of raw spirits from raw materials, not the aging or bottling process.
- All spirit volumes on the report must be recorded in proof gallons, while raw materials are logged in pounds or liquid gallons.
- Distilleries must file this report every month to maintain compliance, even if no production occurred.
- Finished spirits must be formally transferred out of the production account and into either the storage or processing accounts.
Frequently asked questions
Do I need to file TTB Form 5110.40 if I did not produce any spirits this month?
Yes. Once your federal distilled spirits plant permit is active, you must file a monthly operations report as a zero report even if no distillation took place.
What is the difference between the production report and the storage report?
The production report covers the creation of new spirits from raw materials like grain or molasses. Once those spirits are transferred into barrels or holding tanks for aging, they are tracked on the separate storage report.
How do I calculate a proof gallon for my TTB reports?
A proof gallon is one liquid wine gallon at 100 proof. You calculate it by multiplying your actual liquid volume by the spirit's true proof, and then dividing the result by 100.
When do I pay excise taxes on the spirits I produce?
Federal excise taxes are generally not paid during the production phase. Taxes become due when the finished, bottled spirits are formally removed from the bonded premises, typically from the processing account.