Rev. Rul. 57-447

Advice has been requested whether, under the provisions of section 6421(a) of the Internal Revenue Code of 1954, a distributor or dealer may obtain a payment of one cent for each gallon of tax-paid gasoline lost in a casualty. The basis for the request is that the gasoline was not used for any highway purpose.

Section 4081 of the Code, as amended by the Highway Revenue Act of 1956, Public Law 627, 70 Stat. 387, C.B. 1956-2, 1150, imposes a tax at the rate of three cents a gallon on the sale of gasoline by a producer or importer.

Section 6421(a) of the Code provides that if gasoline is used otherwise than as a fuel in certain highway vehicles, the ultimate purchaser is entitled to a payment equal to one cent for each gallon of gasoline so used.

While a distributor or dealer has not used the gasoline for any highway purpose when he suffers a casualty loss, it is to be noted that in order for the ultimate purchaser to be entitled to the tax payment, the gasoline must have been used for a purpose other than as a fuel in the designated highway vehicles. However, gasoline lost in a casualty is not considered to have been used within the meaning of section 6421(a) of the Code.

Therefore, it is held that no payment may be made under section 6421(a) of the Code with respect to gasoline lost by a distributor or dealer in a casualty.