Tax-free production of low alcohol by volume kombucha

(a) Exemption from tax on wine Section 5042(a) of the Internal Revenue Code of 1986 is amended by adding at the end the following: (4) Low alcohol by volume kombucha (A) In general Subject to regulations prescribed by the Secretary, low alcohol by volume kombucha shall not be subject to— (i) tax as wine, or (ii) the provisions of subchapter F. (B) Definition For purposes of this chapter, the term low alcohol by volume kombucha means a beverage which— (i) is fermented solely by a symbiotic culture of bacteria and yeast, (ii) contains not more than 1.25 percent of alcohol by volume, (iii) is sold or offered for sale as kombucha, and (iv) is derived from— (I) fermentable sugars, including sugar, malt or malt substitute, honey, and fruit juice, and (II) plant materials, including tea and coffee.. (b) Exemption from tax on beer Section 5053 of the Internal Revenue Code of 1986 is amended— (1) by redesignating subsection (i) as subsection (j), and (2) by inserting after subsection (h) the following new subsection: (i) Production of low alcohol by volume kombucha Subject to regulations prescribed by the Secretary, low alcohol by volume kombucha (as defined in section 5042(a)(4)(B)) shall not be subject to— (1) tax as beer, or (2) the provisions of subchapter G.. (c) Effective date The amendments made by this section shall apply to calendar quarters beginning after the date of enactment of this Act.