The IRS today released an advance version of Rev. Rul. 2018-02 that addresses whether a mixture of butane (or other gasoline blendstock as defined in Reg. section 48.4081-1(c)(3)(i)) and gasoline is a mixture of two taxable fuels. The IRS ruled that a mixture of butane and gasoline is not an alternative fuel mixture and does not qualify for the alternative fuel mixture credit under section 6426(e).
Read Rev. Rul. 2018-02 [PDF 21 KB]
The facts considered in Rev. Rul. 2018-02 by the IRS are as follows:
The IRS noted that butane is and has been a taxable fuel since before the enactment of section 6426(d) and (e) in 2005. A mixture of butane, a taxable fuel, with gasoline, a taxable fuel, is a mixture of two taxable fuels, not a mixture of a taxable fuel and an alternative fuel, as required by section 6426(e)(2). Therefore, the IRS concluded that the producer may not claim the alternative fuel mixture credit under section 6426(e) for the mixture of butane and gasoline.
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