METHYL ISOBUTYL KETONE ADDED TO SUPERFUND TAX LIST.

Notice 91-33

AGENCY: Internal Revenue Service, Treasury.

ACTION: Notice.

SUMMARY: This notice announces a determination, under Notice 89-61, 1989-1 C.B. 717, that the list of taxable substances in section 4672(a)(3) of the Internal Revenue Code will be modified to include methyl isobutyl ketone.

EFFECTIVE DATE: This modification is effective as of July 1, 1990.

FOR FURTHER INFORMATION CONTACT: Ruth Hoffman, Office of Assistant Chief Counsel (Passthroughs and Special Industries), 202- 566-4475 (not a toll-free number).

SUPPLEMENTARY INFORMATION:

BACKGROUND

Under section 4672(a) of the Internal Revenue Code, an importer or exporter of any substance may request that the Secretary determine whether such substance should be listed as a taxable substance. The Secretary shall add such substance to the list of taxable substances in section 4672(a)(3) if the Secretary determines that taxable chemicals constitute more than 50 percent of the weight, or more than 50 percent of the value, of the materials used to produce such substance. This determination is to be made on the basis of the predominant method of production. Notice 89-61, 1989-1 C.B. 717, sets forth the rules relating to the determination process.

DETERMINATION

On July 9, 1991, the Secretary determined that methyl isobutyl ketone should be added to the list of taxable substances in section 4672(a)(3) of the Internal Revenue Code, effective as of July 1, 1990.

The petition to add methyl isobutyl ketone was submitted by Pecten Chemicals, an exporter of this substance. No material comments were received on this petition.

Methyl isobutyl ketone has been determined to be a taxable substance because a review of its stoichiometric material consumption formula shows that, based on the predominant method of production, taxable chemicals constitute 72.4 percent by weight of the materials used in its production.

HTS number: 2914.13.00.

Schedule B number: 2914.13.0000.

CAS number: 108-10-1.

Methyl isobutyl ketone, a colorless liquid, is derived from the taxable chemical propylene. The predominant method of producing methyl isobutyl ketone is by a three-step process utilizing acetone in condensation, dehydration, and hydrogenation steps. Acetone is passed over a strong base catalyst to form diacetone alcohol, then dehydrated to mesityl oxide, and subsequently hydrogenated to methy isbutyl ketone.

The stoichiometric material consumption formula for this substance is:

2 CH(sub 3)CHCH(sub 2) (propylene) + O(sub 2) (oxygen) yields CH(sub 3)CO CH(sub 2)CH(CH(sub 3))(sub 2) (methyl isobutyl ketone) + .5 O(sub 2) (oxygen).

The rate of tax prescribed for this substance, under section 4671(b)(3), is $5.72 per ton. This is based upon a conversion factor for propylene of 1.175.

                                   Dale D. Goode,