Jurisdiction: United States, federal
Applies to: Wine businesses considering operating as a
separately qualified producer at shared winery premises
Last verified: August 5, 2026
Version: 1.0
Direct answer: An alternating proprietorship, usually called an AP, lets two or more independently qualified wine producers take turns using approved winery space and equipment. The AP is not a custom-crush customer. It is a winery proprietor responsible for its own production, records, TTB operations reports, labeling obligations and federal excise-tax responsibilities while operating under the approved alternation.
If you want to make commercial wine without building a production facility, alternating proprietorship is one of the most important structures to understand. It can give a small producer access to an operating cellar while preserving its status as the actual winery producer.
That extra control comes with a real tradeoff: you also take on the regulatory duties of a winery.
The federal rule is not based on what the contract calls you. It is based on what you actually do. If another bonded winery makes the wine for you, keeps the production records, handles the winery reports and remains responsible for production, you are describing custom crush. If your company is independently qualified and actually directs its own winery operations at shared premises, you may be describing an alternating proprietorship.
For the broader outsource-versus-build decision, start with Solera's Custom Crush Before You Build a Winery. This guide goes deeper on the AP model itself.
AP vs. custom crush in one minute
TTB treats these as different arrangements. Its 2025 Wine Boot Camp and current wine guidance distinguish them this way.
| Question | Alternating proprietor | True custom crush client |
|---|---|---|
| Who is the wine producer? | The AP itself while operating under its approved qualification | The contracted bonded winery |
| Winery qualification | Each AP independently qualifies as a bonded winery | The client does not become a producer merely by buying custom-crush services |
| Federal Basic Permit | The AP obtains the permit required for its wine-production business | A client that conducts wholesale-type activity may need a Wholesaler's Basic Permit; the facts control |
| Winery production records | The AP keeps its own | The bonded producer keeps the winery production records |
| TTB operations report | Each AP files its own TTB F 5120.17 | The custom-crush client does not file the producer's operations report |
| COLA | The bottler obtains any required COLA. If the AP bottles its wine, the AP carries that responsibility | The bottling winery obtains any required COLA |
| Federal wine excise tax | The proprietor removing wine from bond for consumption or sale is responsible for the tax | The bonded wine premises removing the wine from bond handles the tax, although the contract can pass the cost through economically |
| Operational control | The AP must actually direct and remain responsible for its winery operations | The client can specify the desired wine, but the bonded winery remains the responsible producer |
Sources: TTB Wine Boot Camp Basics: Permits, TTB Wine FAQ W11, and 27 CFR 24.136.
The simplest decision rule is this: choose AP only if you intend to be the winery producer, not merely the owner of a brand or grapes.
What is an alternating proprietorship winery?
Under 27 CFR 24.136, wine premises or portions of them may be operated alternately by proprietors that have each completed the required qualification. In practical terms, two or more winery businesses can take turns using approved production space and equipment without each company building a separate physical winery.
TTB commonly describes the proprietor that owns or controls the facility as the host and another proprietor as a tenant or alternator. Those labels are useful shorthand. TTB's Industry Circular 2008-4, however, says the host designation itself creates no special federal responsibility or privilege. Each proprietor remains independently responsible for its own operation.
That is the central idea of an AP: shared infrastructure, separate winery responsibility.
What federal approvals does an AP need?
An AP is not borrowing the host's winery qualification. Each proprietor must qualify for its own wine-production operation.
At the federal level, that means working through TTB's winery qualification and basic-permit requirements. Current TTB materials identify the AP as a bonded winery operator and direct winery applicants to Permits Online and the current winery application packet. TTB says winery operations may not begin until approval is given.
For a new AP, expect the application package to establish at least these points:
- Who the business is. The legal entity and people with ownership or control must be properly disclosed through the applicable TTB application process.
- Where it will operate. The proposed premises must be described and approved for the operation.
- How the space will alternate. 27 CFR 24.136 requires the application to describe the areas, buildings, floors or rooms being alternated and to include diagrams for the arrangements.
- What the host and AP agreed to. TTB's 2025 Wine Boot Camp says both host and tenant should provide the alternating-proprietorship agreement or contract.
- What permanent and alternating space looks like. Current TTB training calls for an updated diagram identifying the areas that alternate and the permanent non-alternating space of host and tenant.
- Any bond or consent-of-surety requirement that applies. Bond requirements depend on the proprietor's facts and current federal rules. Do not assume that the word bonded answers the bond question by itself.
TTB currently says there is no federal fee to apply for or maintain approval to operate a TTB-regulated alcohol business. State and local fees are separate. See TTB's Applying for a Permit and/or Registration.
Solera already has a separate How to Get a TTB Winery Permit guide for the broader application process. Use that page for the permit workflow, and use this page for the AP-specific operating rules.
How alternation actually works in the cellar
An AP is not simply a license that sits beside the host's license while everyone works interchangeably. The premises are operated under an approved alternation plan.
Production turns have a minimum duration
27 CFR 24.136(a) says that operation of a bonded winery engaged in wine production by an alternate proprietor must last at least one calendar day.
TTB's Industry Circular explains an important nuance: for winery-qualification purposes, receiving and crushing grapes alone are not treated as wine production. The circular identifies fermentation and other production activities as the kinds of operations that establish production. It also says specific approved extensions or curtailments, such as temporary use of a bottling line, can be shorter than a calendar day when they are part of the approved alternation plan.
The practical lesson is not to design an AP schedule around an informal hourly equipment rental. Build the operating schedule around the approved premises plan and the actual production your company will conduct.
The handoff has to be visible in the records
When wine, spirits or other accountable materials move from one proprietor to another, both proprietors must reflect that transfer in their records and reports. 27 CFR 24.136(d) also requires an alternation record showing:
- the name and registry number of the incoming or outgoing proprietor;
- the effective date and hour of alternation; and
- the required quantity and alcohol information for accountable materials transferred or received.
This is one of the details that separates a real shared winery from an informal workspace arrangement. The change in responsible proprietor is a regulatory event, not just a calendar booking.
How must wine and space be separated?
TTB has to be able to tell which wine belongs to which proprietor's regulated operation and who has custody of it.
Under 27 CFR 24.136(b), operations in an area being alternated must be completed before the handoff, and accountable materials generally must be removed from the alternated area or transferred to the incoming proprietor. The rule allows an outgoing proprietor's wine or other accountable materials to remain in locked tanks in the alternated premises while remaining in that outgoing proprietor's custody.
TTB's Industry Circular adds practical guidance. The agency must be able to locate and identify each proprietor's cased goods, barrels and tanks. Signage may be enough in some premises, while physical separation such as fencing may be required in others. TTB treats that as a case-by-case revenue-protection and control question.
Do not copy another winery's floor-plan solution without confirming that it fits your own approved arrangement.
The biggest AP failure mode: being a producer only on paper
The most important AP compliance question is not whether the contract contains the words alternating proprietor. It is whether the AP is actually functioning as an independent wine producer.
TTB says it evaluates AP agreements and operating history to determine whether an arrangement is genuinely an AP or is really custom crush. The agency identifies several warning signs, including:
- a business plan centered on marketing wine with little or no production involvement;
- an agreement under which another company handles the AP's production activities, records, reports and tax filings;
- a structure in which the purported AP conducts only a narrow step while another winery performs most remaining processing; and
- a contract priced primarily by quantity of wine produced rather than as rent for space and equipment.
That last item is an indicator, not a universal federal ban on every volume-linked charge. TTB evaluates the arrangement as a whole. The key question is independence and who actually controls the winery operation. See Industry Circular 2008-4 and TTB's 2025 Wine Boot Camp.
If your real plan is, "the host makes the wine and I market it," do not force that business into AP language. Evaluate a true custom-crush structure instead.
Can the host winery's employees do the work?
They can provide contracted services under an AP arrangement, but the AP cannot outsource its identity as the producer.
TTB's Industry Circular says the agreement may allow an AP to hire another proprietor's production or office employees. The AP using those workers must direct and remain responsible for the normal production, bottling and storage work applicable to its operation. TTB specifically points to written direction, such as work orders, as evidence of that control.
This creates a useful operational distinction:
- Acceptable model to evaluate: the AP directs the work, authorizes decisions, owns the required records and remains responsible for the result.
- Red flag: the host's team decides, produces, records, reports and pays taxes for the AP while the AP mainly supplies a brand and sales plan.
Worker classification, wage-and-hour rules, safety obligations and insurance are separate legal issues. The federal AP rules do not answer those questions for you.
What records and reports does an AP keep?
Each AP must maintain its own winery records and file its own TTB operations report. 27 CFR 24.136(d) expressly requires each proprietor to maintain separate records and submit a separate TTB F 5120.17, Report of Wine Premises Operations.
The AP record set also has to support ordinary winery activity: production, transfers, additions, inventory, bottling and removals, as applicable to the operation. Solera's What Records a Bonded Winery Has to Keep guide covers that broader record set, and the TTB Form 5120.17 Line by Line Guide covers the operations report itself.
TTB's current wine FAQ states that records required under Part 24 generally must be kept for at least three years from the record date or last required entry, whichever is later. TTB can require up to three additional years of retention under 27 CFR 24.300(d).
Record control matters as much as record existence
TTB's AP guidance expects each proprietor to be able to access and explain its own winery records. Industry Circular 2008-4 identifies a proprietor keeping its records solely in another proprietor's computer system, or needing the other proprietor to access those records, as an indication that the AP is not operating independently.
That does not mean two wineries can never use the same software product. It means the AP should preserve control of, and independent access to, its own required records.
For shared facilities, that is an important software and permissions requirement. Separate winery data cannot be a cosmetic filter on one undifferentiated record set.
Who gets the COLA?
The bottler does.
TTB's Top Tips from TTB Investigators, updated June 25, 2026, is explicit that responsibility for any required Certificate of Label Approval follows the entity that bottles the wine.
If an AP bottles its own wine while the bottling equipment is properly alternated to that AP, the AP is responsible for its applicable COLA. If a different bonded winery bottles the wine, analyze the actual bottling arrangement and federal labeling path rather than assuming the AP automatically owns the filing.
The phrase any required COLA matters. Federal labeling pathways can differ by product and distribution circumstances, so this guide does not claim that every wine bottle in every situation requires the same approval.
Who handles federal excise tax?
The proprietor that removes the wine from bond for consumption or sale is responsible for federal wine excise tax on that removal. TTB's 2025 Wine Boot Camp uses that rule for both AP and custom-crush discussions.
Eligible wine producers may qualify for current Craft Beverage Modernization Act tax credits. Do not use the old small-domestic-producer credit figures printed in TTB's 2008 AP circular as if they were current. The tax framework changed after that circular, and TTB's current guidance now uses the CBMA structure.
If wine moves in bond between qualified premises, the timing and responsible taxpayer can differ from a taxpaid removal. Track custody and transfer records carefully. Solera's Bulk Wine Inventory: Tracking Gallons in Bond provides the operational background.
Does every AP have to buy a wine bond?
No. Do not confuse bonded winery with must currently have a surety bond on file.
The current definition in 27 CFR Part 24 expressly says bonded-winery status includes premises whose proprietor is operating under the bond exemption in 27 CFR 24.146(d). The exemption applies only when its conditions are met, including the applicable tax-return eligibility and use rules.
So the correct startup question is not "Am I called a bonded winery?" It is "Under my expected operations and federal excise-tax liability, am I required to furnish a wine bond?"
Confirm that answer against the current TTB application process when you apply. TTB's current winery packet also flags its wine-bond worksheet as under review, which is another reason not to copy an old startup checklist blindly.
Federal approval is not the whole license stack
An approved federal AP arrangement does not automatically grant state producer, wholesale, retail, tasting-room, direct-shipping or local land-use privileges.
TTB's Alcohol Beverage Authorities directory states that state and local jurisdictions can impose their own requirements in addition to federal rules, and those rules can be more restrictive.
Before signing a long-term AP agreement, confirm the state and local privileges you actually need:
- production at the shared premises;
- wholesale and self-distribution;
- tasting or on-premise service;
- retail sales;
- direct-to-consumer shipping;
- additional storage locations; and
- local zoning, fire, wastewater or occupancy requirements that apply to your operation.
For one example of how federal and state obligations stack together, see Solera's California Winery Compliance Requirements. Do not generalize California privileges to another state.
What should the AP agreement make clear?
The agreement should describe the operation you will actually run. TTB may review it as evidence of whether the AP is truly independent.
Regulatory-operating points
- Which spaces and equipment alternate
- What space remains permanently assigned to each proprietor
- Who directs production work
- How host employees are engaged and directed when used
- How work orders and production decisions are documented
- How each AP controls and accesses its own records
- How wine, barrels, tanks and case goods are identified
- How custody changes are recorded at alternation
- How each proprietor gains reasonable access to its premises and wine
- How changes to the approved alternation plan will be handled before implementation
Business-contract points
These are prudent contract topics, not a claim that TTB mandates every item:
- rent and equipment charges;
- harvest and bottling scheduling;
- storage and barrel charges;
- maintenance and equipment downtime;
- insurance requirements;
- title and risk of loss;
- responsibility for contamination or rework;
- dispute resolution;
- default and payment terms; and
- what happens to wine and records when the relationship ends.
Have alcohol-regulatory counsel review the final arrangement, especially where federal qualification, state privileges and the commercial contract interact.
Is an AP right for your wine brand?
An AP can be a strong fit when you want to be a real wine producer, make and direct your own production decisions, keep your own winery records and accept the reporting and tax responsibilities of a producer, but you do not want to buy or build the physical production facility yet.
True custom crush is usually the model to evaluate when you want another bonded winery to be the producer while your company concentrates on brand, sales and commercial decisions.
Neither model is inherently more legitimate. They solve different operating problems.
Choose AP because you want producer control and are prepared for producer responsibility, not because the name sounds more like owning a winery.
A practical AP startup checklist
Before committing to an alternating proprietorship:
- Decide whether your company will truly function as the producer.
- Compare AP against true custom crush using the actual division of work, not the marketing description.
- Form the business entity and define ownership/control accurately.
- Identify a host/shared facility that is willing and operationally able to support an AP.
- Map the space, equipment, storage and traffic that must alternate.
- Draft an agreement that reflects real operational control and record responsibility.
- Prepare the premises diagram and AP documentation required by current TTB guidance.
- Apply for the required federal winery qualification and Basic Permit through the current TTB process.
- Confirm whether a wine bond is required for your facts.
- Obtain required state and local approvals separately.
- Establish separate production, alternation, inventory and compliance records before the first operation.
- Define who can direct workers and approve cellar decisions.
- Define who bottles the wine and therefore handles any required COLA.
- Define in-bond transfers and who will remove wine taxpaid.
- Do not begin regulated operations until the required approvals are in place.
How Solera can support an AP without replacing the AP
An alternating proprietor needs its own operating record even when tanks, presses and a bottling line are shared.
Solera can keep the AP's vineyard or grape-source data, lots, cellar work, lab data, inventory, bottling and compliance records organized under the winery's own operation. That is especially useful where a shared facility serves several companies but each proprietor must preserve control of its own records.
Solera does not replace the AP's legal responsibility, its TTB qualification, its state licenses or professional advice. This guide also does not claim that Solera directly submits an AP application or government filing.
The operating model comes first. Software should make the responsibilities easier to execute after you have chosen the right model.
Frequently asked questions
Is an alternating proprietor a bonded winery?
Yes. Each AP qualifies independently to operate as a bonded winery for its approved wine-production operation. The fact that it shares premises and equipment does not make it a custom-crush customer.
Is an AP the same as custom crush?
No. In true custom crush, the contracted bonded winery is the producer. In an AP, the AP itself is the producer and is responsible for its own production, records, reports and other proprietor obligations.
Can two wineries legally use the same tanks and equipment?
Yes, when their approved alternating-proprietor arrangement and premises plan allow it. Shared equipment does not mean shared regulatory responsibility.
Can the host winery's employees make wine for the AP?
An AP agreement may include services from another proprietor's employees, but TTB expects the AP to direct and remain responsible for its own winery work. Written work orders are one way TTB's guidance says that direction can be documented.
Can the host keep all of the AP's records?
Do not give up control of the AP's required winery records. TTB has specifically identified keeping records solely in another proprietor's computer system, or depending on another proprietor to access them, as an indicator against independent AP operation.
Who files TTB Form 5120.17 in an AP arrangement?
Each proprietor files its own TTB F 5120.17 for its bonded wine-premises operations. See 27 CFR 24.136(d).
Who gets the COLA for AP wine?
The bottler is responsible for any required COLA. If the AP bottles the wine under its own operation, the AP carries that responsibility. TTB restated this rule in June 2026 investigator guidance.
Does each AP production turn have to last a full day?
When an alternate proprietor operates a bonded winery to engage in wine production, 27 CFR 24.136(a) requires at least one calendar day. TTB guidance says approved equipment extensions or curtailments, such as use of a bottling line, can be shorter when they are part of the approved plan.
Does a bonded winery always need a surety bond?
No. Current 27 CFR Part 24 expressly recognizes bonded winery premises operating under the bond exemption in 27 CFR 24.146(d). Whether your AP must furnish a bond depends on the current eligibility rules and your facts.
Does federal AP approval cover my state winery license?
No. State and local alcohol requirements are separate. TTB warns that states can impose additional or more restrictive rules, so confirm the producer, wholesale, retail, tasting, DTC and local permissions you need in the relevant jurisdiction.
Official sources and references
- 27 CFR Part 24, Wine, Electronic Code of Federal Regulations, current as accessed August 5, 2026. Key provisions include 24.136 and 24.146(d).
- 27 CFR Part 1, Subpart C, Basic Permits, Electronic Code of Federal Regulations, current as accessed August 5, 2026.
- Wine Boot Camp Basics: Permits, Alcohol and Tobacco Tax and Trade Bureau, March 2025, accessed August 5, 2026.
- Winery/Taxpaid Wine Bottling House application packet, TTB, updated February 25, 2026, accessed August 5, 2026.
- Applying for a Permit and/or Registration, TTB, updated February 25, 2026, accessed August 5, 2026.
- Wine FAQs, including W10 and W11, TTB, accessed August 5, 2026.
- Industry Circular 2008-4: Alternating Proprietors at Bonded Wine Premises, TTB, issued August 18, 2008; webpage updated March 5, 2024; accessed August 5, 2026. Note: its historical small-producer tax-credit section is not used as current tax guidance here.
- Top Tips from TTB Investigators, TTB, updated June 25, 2026, accessed August 5, 2026.
- Alcohol Beverage Authorities in United States, Canada, and Puerto Rico, TTB, updated September 19, 2025, accessed August 5, 2026.
- Tax Reform: Craft Beverage Modernization Act, TTB, accessed August 5, 2026.
Important note
This guide summarizes official information available as of August 5, 2026. Requirements can vary by business structure, location, activity and regulatory status. Confirm material filing decisions with the responsible authority or a qualified adviser.
Change log
| Version | Date | Change |
|---|---|---|
| 1.0 | August 5, 2026 | Initial publication-ready version. Verified against current eCFR, TTB 2025 Wine Boot Camp, 2026 application pages and June 2026 investigator guidance. Historical Industry Circular 2008-4 tax-credit language was excluded in favor of current CBMA guidance. |