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Manufacturers & Retailers Excise Tax Regs., which provides, in
part:
[The section 4041 fuel tax] applies to all taxable
liquid fuel sold for use or used as a fuel in the motor
which is used to propel a diesel-powered vehicle or in
the motor used to propel a motor vehicle, * * * even
though the motor is also used for a purpose other than
the propulsion of the vehicle * * *. Thus, if the
motor of a diesel-powered highway vehicle * * *
operates special equipment by means of a power take-off
or power transfer, tax applies to all taxable liquid
fuel sold for this use or so used, whether or not the
special equipment is mounted on the vehicle * * *. For
example, tax applies to diesel fuel sold to operate the
mixing unit on a concrete mixer truck if the mixing
unit is operated by means of a power take-off from the
motor of the vehicle. * * * However, tax does not apply
to liquid fuel sold for use or used in a separate motor
to operate special equipment (whether or not the
equipment is mounted on the vehicle). If the taxable
liquid fuel used in a separate motor is drawn from the
same tank as the one which supplies fuel for the
propulsion of the vehicle, a reasonable determination
of the quantity of taxable liquid fuel used in such
separate motor or during such period is acceptable for
purposes of application of the tax. * * *
See also Western Waste Indus. v. Commissioner, 104 T.C. 472
(1995)(upholding the regulation as a valid interpretation of the
phrase “used * * * as a fuel in”, as set forth in section
4041(a)(1)).
During 1997, the truck was registered for highway use. The
same diesel engine that propelled the truck also provided power,
via a power take-off, to the loader. Although a portion of the
fuel consumed by the truck’s diesel engine was used for purposes
other than propulsion of the truck, section 48.4041-7,
Manufacturers & Retailers Excise Tax Regs., provides that all
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Last modified: May 25, 2011