In short: The three TTB monthly operational reports track spirits across their life: production (5110.40) accounts for what you distill, storage (5110.11) for spirits aging in bond, and processing (5110.28) for bottling and blending. Each is kept in proof gallons and must foot, opening plus increases minus decreases equals closing, and reconcile to each other and to physical inventory.
The three reports and how they connect
Think of the reports as following the spirit. Production (5110.40) records what comes off the still and where it goes, usually into storage. Storage (5110.11) is the bonded warehouse account: deposits in, removals out, and losses. Processing (5110.28) picks up when spirit leaves storage to be dumped, blended, and bottled. Because the same physical events drive all three, a dump that decrements storage should increment processing by the same proof gallons.
Reading the production report (5110.40)
The production report accounts for spirits produced by distillation during the month, by kind, in proof gallons, and their disposition. The key reconciliation is that what you produced equals what was transferred to storage plus any other disposition. See the 5110.40 guide.
Reading the storage report (5110.11)
The storage report is usually the largest because aging inventory lives here for years. It reconciles opening inventory, deposits (typically from production), removals (to processing, by transfer, or on tax determination), and losses such as evaporation. Everything must foot and agree with physical inventory. See the 5110.11 guide.
Reading the processing report (5110.28)
The processing report tracks spirits received from storage and what happened to them, dumping, mingling, blending, and bottling, ending in finished goods. Proof gallons in must reconcile with bottled output plus losses and inventory on hand. See the 5110.28 guide.
Why everything is in proof gallons
All three reports use proof gallons so quantities at different proofs are comparable. A proof gallon is one wine gallon at 100 proof; convert with proof gallons = wine gallons times proof divided by 100. Consistent proof-gallon math across the reports is what lets them reconcile. See proof gallon.
Common reconciliation mistakes
The usual errors are: a dump that updates storage but not processing (or vice versa), inconsistent proof-gallon rounding between reports, and losses that are not recorded so the account does not foot. Building all three reports from one set of recorded events, rather than three separate spreadsheets, removes most of these by construction.
General information, not legal or tax advice. Confirm current requirements with the TTB and your state authority. Last updated June 20, 2026.