Rev. Rul. 58-457

Advice has been requested whether a dealer, who has registered as a `producer' because he sells gasoline exclusively to producers of gasoline, forfeits his `producer' status by his use in his business motor vehicles of a small portion of the gasoline which he purchases free of tax.

Section 4081 of the Internal Revenue Code of 1954 imposes a tax on gasoline sold by the producer or importer thereof, or by any producer of gasoline. Section 4082(a) of the Code defines the term `producer' to include a refiner, compounder, or blender, and a dealer selling gasoline exclusively to producers of gasoline, as well as a producer. Section 4082(c) provides that if a producer or importer uses (otherwise than in the production of gasoline or of special motor fuels referred to in section 4041(b)) gasoline sold to him free of tax, or produced or imported by him, such use shall be considered a sale. Section 4083 of the Code provides that the tax imposed by section 4081 shall not apply in the case of sales of gasoline to a producer of gasoline.

In the instant case, all actual sales of gasoline by the dealer are to producers exclusively. Use by the dealer of a portion of the gasoline in the conduct of his business, while characterized in section 4082(c) as a sale for purposes of subjecting such use to the tax, is nevertheless not a sale in point of fact that would cause his registration under section 4101 of the Code to be cancelled.

Accordingly, it is held that this dealer is a `dealer selling gasoline exclusively to producers of gasoline' within the meaning of section 4082(a) and as such continues to qualify as a producer under that section of the Code, even though he uses, in his business motor vehicles, a portion of the gasoline which he purchases free of tax.