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it needed from sources other than Petroleum, Petroleum's
production was not necessary for Products to meet its supply
obligations to Texgas.
Discussion
Respondent determined for the taxable years in issue that
pursuant to section 613A(d)(2)(A)11 and section 1.613A-7(r)(2),
11 Section 613A provides, in pertinent part, as follows:
SEC. 613A(d)(2). Retailers Excluded.--Subsection (c) shall
not apply in the case of any taxpayer who directly, or
through a related person, sells oil or natural gas
(excluding bulk sales of such items to commercial or
industrial users), or any product derived from oil or
natural gas (excluding bulk sales of aviation fuels to the
Department of Defense)--
(A) through any retail outlet operated by the taxpayer
or a related person, or
(B) to any person--
(i) obligated under an
agreement or contract with the
taxpayer or a related person to use
a trademark, trade name, or service
mark or name owned by such taxpayer
or related persons, in marketing or
distributing oil or
natural gas or any product derived
from oil or natural gas, or
(ii) given authority, pursuant to an
agreement or contract with the taxpayer
or a related person to occupy any
retail outlet owned, leased, or in any way
controlled by the taxpayer or a related
person.
Notwithstanding the preceding sentence this paragraph shall
not apply in any case where the combined gross receipts from
the sale of such oil, natural gas, or any product derived
(continued...)
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