Rev. Rul. 58-119

Advice has been requested whether a company which uses gasoline in furnishing to farmers aerial custom service, such as crop dusting, is considered to be the ultimate purchaser of the gasoline and entitled to file a claim for payment with respect to the tax paid on such gasoline. The equipment used in performing such services is owned and operated by the aerial custom operator.

Under the provisions of section 6420(a) of the Internal Revenue Code of 1954, if gasoline is used on a farm for farming purposes, the ultimate purchaser is entitled to a payment in the amount determined by multiplying the number of gallons so used by the rate of tax on gasoline under section 4081 which applied on the date he purchased such gasoline. Section 6420(c)(3)(A) of the Code provides, in part, that gasoline shall be treated as used for farming purposes only if used by the owner, tenant, or operator of a farm in connection with cultivating the soil, or in connection with raising or harvesting agricultural or horticultural commodities, including the raising, shearing, feeding, caring for, training, and management of livestock, bees, poultry and fur-bearing animals and wildlife, on a farm of which he is the owner, tenant, or operator; except that if such use is by any other person, the owner, tenant, or operator of the farm shall be treated as the user and ultimate purchaser of such gasoline.

Accordingly, it is held that where gasoline is used by a custom operations described in section oprations described in section 6420(c)(3)(A) on a farm for farming purposes, the farmer on whose farm the services are performed is considered to be the user and ultimate purchaser of such gasoline. Therefore, in the instant case, the farmer and not the aerial custom operator is entitled to file a claim for payment provided by section 6420(a) of the Code.