- 3 -
Petitioner filed a timely 1997 Federal income tax return.
On a Form 4136, Credit for Federal Tax Paid on Fuels, included
with that return, petitioner claimed a fuel tax credit of $1,098.
According to the form, $959 of that amount is attributable to the
diesel fuel consumed by the operation of the loader.
In the notice of deficiency, respondent disallowed the
portion of the fuel tax credit relating to the diesel fuel used
to operate the loader.
Discussion
Section 4041(a)(1) imposes a tax on diesel fuel:
(i) sold by any person to an owner, lessee, or other
operator of a diesel-powered highway vehicle or a
diesel-powered train for use as a fuel in such vehicle
or train, or
(ii) used by any person as a fuel in a diesel-powered
highway vehicle or a diesel-powered train unless there
was a taxable sale of such fuel under clause (i).
The tax is not imposed if diesel fuel is “sold for use or used in
an off-highway business use”, as defined in section 6421(e)(2).
Sec. 4041(b)(1)(A), (C). If a tax has been imposed under section
4041 on a sale of diesel fuel, and the fuel is used by the
purchaser for a nontaxable purpose, such as an off-highway
business use, section 34 allows a credit against income tax for
the section 4041 tax imposed on the sale. See sec. 34(a)(3)1.
1 The credit is equal to the sum of the amounts otherwise
payable to the taxpayer under section 6427(a) (fuels not used for
taxable purposes). See also sec. 6427(k); sec. 48.6427-1,
Manufacturers & Retailers Excise Tax Regs.
Page: Previous 1 2 3 4 5 6 7 Next
Last modified: May 25, 2011