Gasoline & Gasohol

The term gasoline means all products commonly or commercially known or sold as gasoline (including gasohol) with an octane rating of 75 or more that are suitable for use as a motor fuel. It includes gasoline blendstocks, discussed in Publication 510. Aviation gasoline is discussed later.

Nontaxable Uses

The following are the uses of gasoline and gasohol for which a credit or refund may be allowable to an ultimate purchaser.

• On a farm for farming purposes (credit only).
• Off-highway business use.
• Export.
• In a boat engaged in commercial fishing.
• In an intercity or local bus.
• In a school bus.
• In a vehicle owned by the United States.
• By a nonprofit educational organization.
• By a state or local government.
• By an aircraft museum.

Gasohol Blending

A gasohol blender may be allowed a credit or refund for part of the excise tax imposed on gasoline that the blender uses to produce gasohol. A gasohol blender is any person that regularly produces gasohol outside of the bulk transfer/terminal system for sale or use in the blender's trade or business.

The amount you may claim is based on the gallons of gasoline used to make gasohol. You cannot take a refund or credit if the gasoline was taxed at a reduced rate.

Gasohol. Gasohol is a mixture of gasoline and alcohol that satisfies the alcohol-content requirements immediately after the mixture is produced. Alcohol includes ethanol and methanol. Generally, this includes ethanol used to produce ethyl tertiary butyl ether (ETBE) and methanol produced from methane gas formed in waste disposal sites. However, alcohol produced from petroleum, natural gas, coal (including peat), or any derivative or product of these items, and alcohol that is less than 190 proof do not qualify as alcohol for these rules.

Alcohol-content requirements. To qualify as gasohol, a mixture must contain a specific amount of alcohol by volume (without rounding). The amount of credit or refund depends on the type of gasohol you blend. There are three types of gasohol.

• 10% gasohol. This is a mixture that contains at least 9.8% alcohol.
• 7.7% gasohol. This is a mixture that contains at least 7.55%, but less than 9.8%, alcohol.
• 5.7% gasohol. This is a mixture that contains at least 5.59%, but less than 7.55%, alcohol.

Any mixture that contains less than 5.59% alcohol is not gasohol.

Figure alcohol content on a batch-by-batch basis. If you splash blend a batch in an empty tank, figure the volume of alcohol (without adjustment for temperature) by dividing the metered gallons of alcohol by the total metered gallons of alcohol and gasoline as shown on each delivery ticket. However, if you add the metered gallons to a tank already containing more than 0.5% of its capacity in a liquid, you must include the alcohol and non-alcohol fuel contained in that liquid in determining the volume of alcohol in that batch.

Example 1. John uses an empty 8,000 gallon tank to blend alcohol and gasoline. His delivery tickets show that he blended batch 1 using 7,200 metered gallons of gasoline and 800 metered gallons of alcohol. John divides the gallons of alcohol (800) by the total gallons of alcohol and gasoline delivered (8,000). Batch 1 qualifies as 10% gasohol.

Example 2. John blends batch 2 in an empty tank. According to his delivery tickets, he blended 7,220 gallons of gasoline and 780 gallons of alcohol. Because batch 2 contains only 9.75% alcohol (780 x 8,000), it qualifies as 7.7% gasohol.

Batches containing at least 9.8% alcohol. If a mixture contains at least 9.8% but less than 10% alcohol, part of the mixture is considered to be 10% gasohol. To figure that part, multiply the number of gallons of alcohol in the mixture by 10. The result is the number of gallons on which a credit or refund may be claimed if the gasoline in the mixture was taxed at the full rate. The remaining gallons in the mixture are excess liquid on which no credit or refund is allowed.

Example. John uses an empty 8,000 gallon tank to blend gasoline and alcohol. The delivery tickets show he purchased and blended 7,205 metered gallons of gasoline and 795 metered gallons of alcohol. The gasoline was taxed at the full rate. The batch contains 9.9375% alcohol (795 x 8,000). John determines that 7,950 gallons (10 x 795) of the mixture qualifies as 10% gasohol. The other 50 gallons is excess liquid. John reduces the amount of gasoline (7,205 gallons) by the excess liquid (50 gallons) to determine the amount of gasoline used to produce the 10% gasohol. He can claim a refund or credit for part of the excise tax imposed on 7,155 gallons of gasoline. He cannot claim a refund or credit on the 50 gallons of excess liquid.

Batches containing at least 7.55% alcohol. If a mixture contains at least 7.55% alcohol but less than 7.7% alcohol, part of the mixture is considered to be 7.7% gasohol. To figure that part, multiply the number of gallons of alcohol in the mixture by 12.987. The result is the number of gallons on which a credit or refund may be claimed if the gasoline in the mixture was taxed at the full rate. The remaining gallons in the mixture are excess liquid on which no credit or refund is allowed.

Batches containing at least 5.59% alcohol. If a mixture contains at least 5.59% but less than 5.7% alcohol, part of the mixture is considered to be 5.7% gasohol. To figure that part, multiply the number of gallons of alcohol in the mixture by 17.544. The result is the number of gallons on which a credit or refund may be claimed if the gasoline in the mixture was taxed at the full rate. The remaining gallons in the mixture are excess liquid on which no credit or refund is allowed.

Previous| First | Next

Publication Index | IRS-Forms Main | Home