Section 40 Fuels

An excise tax is imposed (recaptured) if the second generation biofuel producer credit was claimed and the claimant did not:

Sell the second generation biofuel to another person for use by such person in such person’s trade or business to produce a qualified second generation biofuel mixture (other than casual off-farm production),

Sell the second generation biofuel to another person for use by such person as a fuel in a trade or business,

Sell the second generation biofuel to another person who sells such second generation biofuel at retail to another person and places such second generation biofuel in the fuel tank of such other person, or

Use the second generation biofuel for any purpose described in the preceding clauses.

When recapturing, the taxpayer must pay a tax on each gallon of second generation biofuel at the rate used to figure the credit. The tax rate for second generation biofuel is $1.01 per gallon.

CSTO employees input adjustment with TC 29X on MFT 03 using IRS No. 51.