Publication 378 |
2000 Tax Year |
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.
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