Second Generation Biofuel Producer Credit

§ 40. Alcohol, etc., used as fuel(a) General ruleFor purposes of section 38, the alcohol fuels credit determined under this section for the taxable year is an amount equal to the sum of—(1) the alcohol mixture credit, (2) the alcohol credit, (3) in the case of an eligible small ethanol producer, the small ethanol producer credit, plus (4) the second generation biofuel producer credit. (b) Definition of alcohol mixture credit, alcohol credit, and small ethanol producer creditFor purposes of this section, and except as provided in subsection (h)—(1) Alcohol mixture credit(A) In generalThe alcohol mixture credit of any taxpayer for any taxable year is 60 cents for each gallon of alcohol used by the taxpayer in the production of a qualified mixture. (B) Qualified mixtureThe term “qualified mixture” means a mixture of alcohol and gasoline or of alcohol and a special fuel which—(i) is sold by the taxpayer producing such mixture to any person for use as a fuel, or (ii) is used as a fuel by the taxpayer producing such mixture. (C) Sale or use must be in trade or business, etc.Alcohol used in the production of a qualified mixture shall be taken into account—(i) only if the sale or use described in subparagraph (B) is in a trade or business of the taxpayer, and (ii) for the taxable year in which such sale or use occurs. (D) Casual off-farm production not eligibleNo credit shall be allowed under this section with respect to any casual off-farm production of a qualified mixture. (2) Alcohol credit(A) In generalThe alcohol credit of any taxpayer for any taxable year is 60 cents for each gallon of alcohol which is not in a mixture with gasoline or a special fuel (other than any denaturant) and which during the taxable year—(i) is used by the taxpayer as a fuel in a trade or business, or (ii) is sold by the taxpayer at retail to a person and placed in the fuel tank of such person’s vehicle. (B) User credit not to apply to alcohol sold at retailNo credit shall be allowed under subparagraph (A)(i) with respect to any alcohol which was sold in a retail sale described in subparagraph (A)(ii). (3) Smaller credit for lower proof alcoholIn the case of any alcohol with a proof which is at least 150 but less than 190, paragraphs (1)(A) and (2)(A) shall be applied by substituting “45 cents” for “60 cents”. (4) Small ethanol producer credit(A) In generalThe small ethanol producer credit of any eligible small ethanol producer for any taxable year is 10 cents for each gallon of qualified ethanol fuel production of such producer.