[Code of Federal Regulations]
[Title 26, Volume 15]
[Revised as of April 1, 2001]
From the U.S. Government Printing Office via GPO Access
[CITE: 26CFR48.4041-9]

[Page 70-71]
 
                       TITLE 26--INTERNAL REVENUE
 
                  CHAPTER I--INTERNAL REVENUE SERVICE,
                       DEPARTMENT OF THE TREASURY
                               (Continued)
 
PART 48--MANUFACTURERS AND RETAILERS EXCISE TAXES--Table of Contents
 
                        Subpart F--Special Fuels
 
Sec. 48.4041-9  Exemption for farm use.

    (a) In general. The tax imposed by section 4041 does not apply to 
diesel fuel or special motor fuel, or fuel used in noncommercial 
aviation, sold for use or used on a farm in the United States for 
farming purposes. The tax applies in the case of diesel fuel delivered 
into the fuel supply tank of a highway vehicle, or special motor fuel 
delivered into the fuel supply tank of a motor vehicle or motorboat, 
even if it is known that the liquid fuel is to be used on a farm for 
farming purposes. Credit or refund of the tax paid in such case may be 
claimed as provided by section 6427(c) upon proof that the taxable 
liquid was used on a farm for farming purposes. A tax-free sale of fuel 
delivered into the fuel supply tank of an aircraft in noncommercial 
aviation where such fuel is to be used on the farm for farming purposes 
may be made only if the requirements of Sec. 48.4041-11 are met. The 
terms ``used on a farm for farming purposes'', and related terms, have 
the same meaning for purposes of the exemption in section 4041(f) and 
the regulations in this section as these terms are defined in paragraphs 
(1), (2), and (3) of section 6420(c) and the regulations contained in 
Sec. 48.6420-4.
    (b) Application of exemption. The exemption referred to in paragraph 
(a) of this section does not apply with respect to diesel fuel or 
special motor fuel or fuel used in noncommercial aviation sold for use 
or used for nonfarming purposes, or diesel fuel or special motor fuel or 
fuel used in noncommercial aviation sold for use or used off a farm, 
regardless of the nature of the use. Thus, if a vehicle, motorboat, or 
aircraft is used both on a farm and off the farm, or if it is used on a 
farm both for farming and nonfarming purposes, the exemption applies 
only with respect to that portion of the diesel fuel or special motor 
fuel or fuel used in noncommercial aviation which is sold for use or 
used ``on a farm for farming purposes''. For purposes of this exemption, 
it is immaterial

[[Page 71]]

whether or not a vehicle is registered for highway use. However, the 
actual use of the vehicle and the place where it is used are material. 
For example, if a truck used on a farm for farming purposes is also used 
on the highways (even though in connection with operating the farm), tax 
applies to that diesel fuel or special motor fuel which is sold for use 
or used in operating the truck on the highways, since the fuel was used 
off the farm.
    (c) Termination of exemption. The exemption referred to in paragraph 
(a) of this section shall not apply on and after October 1, 1988.

[T.D. 8066, 51 FR 18, Jan. 2, 1986]