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tion of price where such price was not deter-
mined in accordance with such a specific
pricing method if—
‘‘(I) the taxpayer establishes that
none of such pricing methods was like-
ly to result in a price that would clear-
ly reflect income, the taxpayer used an-
other pricing method to determine such
price, and such other pricing method
was likely to result in a price that
would clearly reflect income,
‘‘(II) the taxpayer has documenta-
tion (which was in existence as of the
time of filing the return) which sets
forth the determination of such price
in accordance with such other method
and which establishes that the require-
ments of subclause (I) were satisfied,
and
‘‘(III) the taxpayer provides such
documentation to the Secretary within
30 days of request for such documenta-
tion.
‘‘(iii) Any portion of such net increase
which is attributable to any transaction
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solely between foreign corporations unless,
in the case of any such corporations, the
treatment of such transaction affects the de-
termination of income from sources within
the United States or taxable income effec-
tively connected with the conduct of a trade
or business within the United States.’’
(c) COORDINATION WITH REASONABLE CAUSE EXCEP-
TION.—Paragraph (3) of section 6662(e) is amended by
adding at the end thereof the following new subparagraph:
‘‘(D) COORDINATION
WITH
REASONABLE
CAUSE
EXCEPTION.—For purposes of section
6664(c) the taxpayer shall not be treated as hav-
ing reasonable cause for any portion of an
underpayment attributable to a net section 482
transfer price adjustment unless such taxpayer
meets the requirements of clause (i), (ii), or (iii)
of subparagraph (B) with respect to such por-
tion.’’
(d) CONFORMING AMENDMENT.—Clause (iii) of section
6662(h)(2)(A) is amended to read as follows:
‘‘(iii) in paragraph (1)(B)(ii)—
‘‘(I) 
‘$20,000,000’ 
for
‘$5,000,000’, and
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‘‘(II) ‘20 percent’ for ‘10 per-
cent’.’’
(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to taxable years beginning after Decem-
ber 31, 1993.
SEC. 8237. DENIAL OF PORTFOLIO INTEREST EXEMPTION
FOR CONTINGENT INTEREST.
(a) GENERAL RULE.—
(1) Subsection (h) of section 871 (relating to re-
peal of tax on interest of nonresident alien individ-
uals received from certain portfolio debt investments)
is amended by redesignating paragraphs (4), (5), and
(6) as paragraphs (5), (6), and (7), respectively, and
by inserting after paragraph (3) the following new
paragraph:
‘‘(4) PORTFOLIO
INTEREST
NOT
TO
INCLUDE
CERTAIN
CONTINGENT
INTEREST.—For purposes of
this subsection—
‘‘(A) IN
GENERAL.—Except as otherwise
provided in this paragraph, the term ‘portfolio
interest’ shall not include—
‘‘(i) any interest if the amount of such
interest is determined by reference to—
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‘‘(I) any receipts, sales or other
cash flow of the debtor or a related per-
son,
‘‘(II) any income or profits of the
debtor or a related person,
‘‘(III) any change in value of any
property of the debtor or a related per-
son, or
‘‘(IV) any dividend, partnership
distributions, or similar payments
made by the debtor or a related person,
or
‘‘(ii) any other type of contingent in-
terest that is identified by the Secretary by
regulation, where a denial of the portfolio
interest exemption is necessary or appro-
priate to prevent avoidance of Federal in-
come tax.
‘‘(B) RELATED PERSON.—The term ‘related
person’ means any person who is related to the
debtor within the meaning of section 267(b) or
707(b)(1), or who is a party to any arrangement
undertaken for a purpose of avoiding the appli-
cation of this paragraph.
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‘‘(C) EXCEPTIONS.—Subparagraph (A)(i)
shall not apply to—
‘‘(i) any amount of interest solely by
reason of the fact that the timing of any in-
terest or principal payment is subject to a
contingency,
‘‘(ii) any amount of interest solely by
reason of the fact that the interest is paid
with respect to nonrecourse or limited re-
course indebtedness,
‘‘(iii) any amount of interest all or
substantially all of which is determined by
reference to any other amount of interest
not described in subparagraph (A) (or by
reference to the principal amount of indebt-
edness on which such other interest is paid),
‘‘(iv) any amount of interest solely by
reason of the fact that the debtor or a relat-
ed person enters into a hedging transaction
to reduce the risk of interest rate or cur-
rency fluctuations with respect to such in-
terest,
‘‘(v) any amount of interest determined
by reference to—
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‘‘(I) changes in the value of prop-
erty (including stock) that is actively
traded (within the meaning of section
1092(d)) other than property described
in section 897(c)(1) or (g),
‘‘(II) the yield on property de-
scribed in subclause (I), other than a
debt instrument that pays interest de-
scribed in subparagraph (A), or stock
or other property that represents a ben-
eficial interest in the debtor or a relat-
ed person, or
‘‘(III) changes in any index of the
value 
of 
property 
described 
in
subclause (I) or of the yield on prop-
erty described in subclause (II), and
‘‘(vi) any other type of interest identi-
fied by the Secretary by regulation.
‘‘(D) EXCEPTION
FOR
CERTAIN
EXISTING
INDEBTEDNESS.—Subparagraph (A) shall not
apply to any interest paid or accrued with re-
spect to any indebtedness with a fixed term—
‘‘(i) which was issued on or before
April 7, 1993, or
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‘‘(ii) which was issued after such date
pursuant to a written binding contract in
effect on such date and at all times there-
after before such indebtedness was issued.’’
(2) Subsection (c) of section 881 is amended by
redesignating paragraphs (4), (5), and (6) as para-
graphs (5), (6), and (7), respectively, and by insert-
ing after paragraph (3) the following new paragraph:
‘‘(4) PORTFOLIO
INTEREST
NOT
TO
INCLUDE
CERTAIN
CONTINGENT
INTEREST.—For purposes of
this subsection, the term ‘portfolio interest’ shall not
include any interest which is treated as not being
portfolio interest under the rules of section 871(h)(4).’’
(b) CONFORMING AMENDMENTS.—
(1) Clause (ii) of section 871(h)(2)(B) is amend-
ed by striking ‘‘paragraph (4)’’ and inserting ‘‘para-
graph (5)’’.
(2) Clause (ii) of section 881(c)(2)(B) is amend-
ed by striking ‘‘section 871(h)(4)’’ and inserting ‘‘sec-
tion 871(h)(5)’’.
(3) Paragraph (6) of section 881(c) (as redesig-
nated by subsection (a)) is amended by striking ‘‘sec-
tion 871(h)(5)’’ each place it appears and inserting
‘‘section 871(h)(6)’’.
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(4) Paragraph (9) of section 1441(c) is amended
by striking ‘‘section 871(h)(3)’’ and inserting ‘‘section
871(h)(3) or (4)’’.
(5) Subsection (a) of section 1442 is amended—
(A) by striking ‘‘871(h)(3)’’ and inserting
‘‘871(h)(3) or (4)’’, and
(B) by striking ‘‘881(c)(3)’’ and inserting
‘‘881(c)(3) or (4)’’.
(c) EFFECTIVE DATE.—The amendments made by this
section shall apply to interest received after December 31,
1993.
SEC. 8238. REGULATIONS DEALING WITH CONDUIT AR-
RANGEMENTS.
Section 7701 is amended by redesignating subsection
(l) as subsection (m) and by inserting after subsection (k)
the following new subsection:
‘‘(l) REGULATIONS RELATING TO CONDUIT ARRANGE-
MENTS.—The 
Secretary 
may 
prescribe 
regulations
recharacterizing any multiple-party financing transaction
as a transaction directly among any 2 or more of such par-
ties 
where 
the 
Secretary 
determines 
that 
such
recharacterization is appropriate to prevent avoidance of
any tax imposed by this title.’’
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SEC. 8239. TREATMENT OF EXPORT OF CERTAIN SOFTWOOD
LOGS.
(a) FOREIGN SALES CORPORATIONS.—Paragraph (2)
of section 927(a) (relating to exclusion of certain property)
is amended by striking ‘‘or’’ at the end of subparagraph
(C), by striking the period at the end of subparagraph (D)
and inserting ‘‘, or’’, and by adding at the end the follow-
ing:
‘‘(E) any unprocessed timber which is a
softwood.
For purposes of subparagraph (E), the term ‘unproc-
essed timber’ means any log, cant, or similar form of
timber.’’
(b) DOMESTIC
INTERNATIONAL
SALES
CORPORA-
TIONS.—Paragraph (2) of section 993(c) (relating to exclu-
sion of certain property) is amended—
(1) by striking ‘‘or’’ at the end of subparagraph
(C), by striking the period at the end of subparagraph
(D) and inserting ‘‘, or’’, and by adding after sub-
paragraph (D) the following new subparagraph:
‘‘(E) any unprocessed timber which is a
softwood.’’, and
(2) by adding at the end the following new sen-
tence: ‘‘For purposes of subparagraph (E), the term
‘unprocessed timber’ means any log, cant, or similar
form of timber.’’
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(c) SOURCE RULE.—Subsection (b) of section 865 (re-
lating to source rules for personal property sales) is amend-
ed by adding at the end the following: ‘‘Notwithstanding
the preceding sentence, any income from the sale of any
unprocessed timber which is a softwood and was cut from
an area in the United States shall be sourced in the United
States and the rules of sections 862(a)(6) and 863(b) shall
not apply to any such income. For purposes of the preceding
sentence, the term ‘unprocessed timber’ means any log, cant,
or similar form of timber.’’
(d) ELIMINATION OF DEFERRAL.—Subsection (d) of
section 954 is amended by adding at the end the following
new paragraph:
‘‘(4) SPECIAL RULE FOR CERTAIN TIMBER PROD-
UCTS.—For purposes of subsection (a)(2), the term
‘foreign base company sales income’ includes any in-
come (whether in the form of profits, commissions,
fees, or otherwise) derived in connection with—
‘‘(A) the sale of any unprocessed timber re-
ferred to in section 865(b), or
‘‘(B) the milling of any such timber outside
the United States.
Subpart G shall not apply to any amount treated as
subpart F income by reason of this paragraph.’’
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(e) EFFECTIVE DATE.—The amendments made by this
section shall apply to sales, exchanges, or other dispositions
after the date of the enactment of this Act.
PART IV—TRANSPORTATION FUELS PROVISIONS
Subpart A—Transportation Fuels Tax
SEC. 8241. TRANSPORTATION FUELS TAX.
(a) GASOLINE.—
(1) 
IN
GENERAL.—Clause 
(iii) 
of 
section
4081(a)(2)(B) (relating to rates of tax) is amended to
read as follows:
‘‘(iii) the deficit reduction rate is 6.8 cents
a gallon (4.3 cents a gallon on and after October
1, 1995).’’
(2) DEFICIT
REDUCTION
RATE
MADE
PERMA-
NENT.—Section 4081(d) (relating to termination) is
amended by striking paragraph (3).
(b) DIESEL FUEL AND AVIATION FUEL.—
(1) DIESEL FUEL.—
(A) IN GENERAL.—Paragraph (4) of section
4091(b) (relating to rate of tax) is amended by
striking ‘‘2.5 cents per gallon’’ and inserting
‘‘6.8 cents per gallon (4.3 cents per gallon on
and after October 1, 1995)’’.
(B) DIESEL
FUEL
DEFICIT
REDUCTION
RATE
MADE
PERMANENT.—Section 4091(b)(6)
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(relating to termination) is amended by striking
subparagraph (D).
(2) AVIATION FUEL.—
(A) GASOLINE
IN
NONCOMMERCIAL
AVIA-
TION.—Paragraph (3) of section 4041(c) is
amended to read as follows:
‘‘(3) RATE OF TAX.—The rate of tax imposed by
paragraph (2) on any gasoline is 1 cent.’’
(3) CONFORMING AMENDMENTS.—
(A) Subparagraphs (A) and (B) of section
4093(c)(2) are amended to read as follows:
‘‘(A) NO REFUND OF CERTAIN TAXES ON
FUEL
USED
IN
DIESEL-POWERED
TRAINS.—In
the case of fuel sold for use in a diesel-powered
train, paragraph (1) shall not apply to so much
of the tax imposed by section 4091 as is attrib-
utable to the Leaking Underground Storage Tank
Trust Fund financing rate and the diesel fuel
deficit reduction rate imposed under such sec-
tion. The preceding sentence shall not apply in
the case of fuel sold for exclusive use by a State
or any political subdivision thereof.
‘‘(B) NO REFUND OF CERTAIN TAXES ON
FUEL USED IN AIRCRAFT.—In the case of fuel
sold for use in any aircraft (except supplies for
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vessels or aircraft within the meaning of section
4221(d)(3)), paragraph (1) also shall not apply
to so much of the tax imposed by section 4091
as is attributable to the Leaking Underground
Storage Tank Trust Fund financing rate and the
aviation fuel deficit reduction rate imposed by
such section. The preceding sentence shall not
apply in the case of fuel sold for exclusive use by
a State or any political subdivision thereof.’’
(B) Section 4093(d) is amended by insert-
ing ‘‘and the aviation fuel deficit reduction rate’’
after ‘‘rate’’.
(c) SPECIAL
FUELS.—Section 4041(m)(1)(A) is
amended by striking ‘‘1.25 cents’’ and inserting ‘‘5.55 cents
(4.3 cents on and after October 1, 1995)’’.
(d) FUEL USED IN COMMERCIAL TRANSPORTATION ON
INLAND WATERWAYS.—
(1) IN GENERAL.—Section 4042(b)(1) (relating
to amount of tax) is amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (A),
(B) by striking the period at the end of sub-
paragraph (B) and inserting ‘‘, and’’, and
(C) by adding at the end thereof the follow-
ing new subparagraph:
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‘‘(C) the deficit reduction rate.’’
(2) RATE.—Section 4042(b)(2) (relating to rates)
is amended by adding at the end the following new
subparagraph:
‘‘(C) The deficit reduction rate is 4.3 cents
per gallon.’’
(e) CONFORMING AMENDMENTS.—
(1) Section 6421(f) is amended—
(A) by striking subparagraph (B) of para-
graph (2) and inserting the following:
‘‘(B) in aviation which is not noncommer-
cial aviation (as so defined) with respect to the
tax imposed by section 4081 at the Leaking Un-
derground Storage Tank Trust Fund financing
rate and at the deficit reduction rate to the ex-
tent such deficit reduction rate does not exceed
4.3 cents per gallon.’’, and
(B) by inserting ‘‘and at the deficit reduc-
tion rate to the extent such deficit reduction rate
does not exceed 4.3 cents per gallon’’ after ‘‘fi-
nancing rate’’ in paragraph (3), and
(C) by inserting ‘‘AND DEFICIT REDUCTION
TAX’’ after ‘‘TAX’’ in the heading for paragraph
(3).
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(2) Section 6427(l) is amended by striking para-
graphs (3) and (4) and inserting the following new
paragraphs:
‘‘(3) NO REFUND OF CERTAIN TAXES ON FUEL
USED IN DIESEL-POWERED TRAINS.—In the case of
fuel used in a diesel-powered train, paragraph (1)
shall not apply to so much of the tax imposed by sec-
tion 4091 as is attributable to the Leaking Under-
ground Storage Tank Trust Fund financing rate and
the diesel fuel deficit reduction rate imposed by such
section. The preceding sentence shall not apply in the
case of fuel sold for exclusive use by a State or any
political subdivision thereof.
‘‘(4) NO REFUND OF CERTAIN TAXES ON FUEL
USED IN AIRCRAFT.—In the case of fuel used in any
aircraft (except supplies for vessels or aircraft within
the meaning of section 4221(d)(3)), paragraph (1)
also shall not apply to so much of the tax imposed
by section 4091 as is attributable to the Leaking Un-
derground Storage Tank Trust Fund financing rate
and the aviation fuel deficit reduction rate imposed
by such section. The preceding sentence shall not
apply in the case of fuel sold for exclusive use by a
State or any political subdivision thereof.’’
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(3) Section 9502(b)(3) is amended by inserting
‘‘and the deficit reduction rate’’ after ‘‘financing
rate’’.
(4) Section 9503(b)(4)(B) is amended by insert-
ing ‘‘and the deficit reduction rates under such sec-
tions to the extent such rates do not exceed 4.3 cents
per gallon’’ after ‘‘such sections’’.
(5) Section 9503(c)(4)(D) is amended by insert-
ing ‘‘and the deficit reduction rates under such sec-
tions to the extent such rates do not exceed 4.3 cents
per gallon’’ after ‘‘such sections’’.
(6) Section 9503(c)(5)(B) is amended by insert-
ing ‘‘and the deficit reduction rate under such section
to the extent such rate does not exceed 4.3 cents per
gallon’’ after ‘‘such section’’.
(7) Section 9503(c)(6)(D) is amended by insert-
ing ‘‘and the deficit reduction rate to the extent such
rate does not exceed 4.3 cents per gallon’’ after ‘‘fi-
nancing rate’’.
(8) Section 9506(b) is amended by inserting
‘‘and the deficit reduction rate’’ after ‘‘financing
rate’’.
(f) EFFECTIVE DATE.—The amendments made by this
section shall take effect on October 1, 1993.
(g) FLOOR STOCKS TAXES.—
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(1) IMPOSITION OF TAX.—In the case of gasoline,
diesel fuel, and aviation fuel on which tax was im-
posed under section 4081 or 4091 of the Internal Rev-
enue Code of 1986 before October 1, 1993, and which
is held on such date by any person, there is hereby
imposed a floor stocks tax of 4.3 cents per gallon on
such gasoline, diesel fuel, and aviation fuel.
(2) LIABILITY FOR TAX AND METHOD OF PAY-
MENT.—
(A) LIABILITY FOR TAX.—A person holding
gasoline, diesel fuel, or aviation fuel on October
1, 1993, to which the tax imposed by paragraph
(1) applies shall be liable for such tax.
(B) METHOD OF PAYMENT.—The tax im-
posed by paragraph (1) shall be paid in such
manner as the Secretary shall prescribe.
(C) TIME FOR PAYMENT.—The tax imposed
by paragraph (1) shall be paid on or before No-
vember 30, 1993.
(3) DEFINITIONS.—For purposes of this sub-
section—
(A) HELD BY A PERSON.—Gasoline, diesel
fuel, and aviation fuel shall be considered as
‘‘held by a person’’ if title thereto has passed to
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HR 2264 EAS
such person (whether or not delivery to the per-
son has been made).
(B) GASOLINE.—The term ‘‘gasoline’’ has
the meaning given such term by section 4082 of
such Code.
(C) DIESEL FUEL.—The term ‘‘diesel fuel’’
has the meaning given such term by section 4092
of such Code.
(D) AVIATION FUEL.—The term ‘‘aviation
fuel’’ has the meaning given such term by section
4092 of such Code.
(E) SECRETARY.—The term ‘‘Secretary’’
means the Secretary of the Treasury or his dele-
gate.
(4) EXCEPTION
FOR
EXEMPT
USES.—The tax
imposed by paragraph (1) shall not apply to gasoline,
diesel fuel, or aviation fuel held by any person exclu-
sively for any use to the extent a credit or refund of
the tax imposed by section 4081 or 4091 of such Code,
as the case may be, is allowable for such use.
(5) EXCEPTION
FOR
FUEL
HELD
IN
VEHICLE
TAX.—No tax shall be imposed by paragraph (1) on
gasoline or diesel fuel held in the tank of a motor ve-
hicle or motorboat.
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(6) EXCEPTION
FOR
CERTAIN
AMOUNTS
OF
FUEL.—
(A) IN GENERAL.—No tax shall be imposed
by paragraph (1)—
(i) on gasoline held on October 1, 1993,
by any person if the aggregate amount of
gasoline held by such person on such date
does not exceed 4,000 gallons, and
(ii) on diesel fuel or aviation fuel held
on October 1, 1993, by any person if the ag-
gregate amount of diesel fuel or aviation
fuel held by such person on such date does
not exceed 2,000 gallons.
The preceding sentence shall apply only if such
person submits to the Secretary (at the time and
in the manner required by the Secretary) such
information as the Secretary shall require for
purposes of this paragraph.
(B) EXEMPT FUEL.—For purposes of sub-
paragraph (A), there shall not be taken into ac-
count fuel held by any person which is exempt
from the tax imposed by paragraph (1) by rea-
son of paragraph (4) or (5).
(C) CONTROLLED GROUPS.—For purposes of
this paragraph—
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HR 2264 EAS
(i) CORPORATIONS.—
(I) IN
GENERAL.—All persons
treated as a controlled group shall be
treated as 1 person.
(II) CONTROLLED
GROUP.—The
term ‘‘controlled group’’ has the mean-
ing given to such term by subsection
(a) of section 1563 of such Code; except
that for such purposes the phrase
‘‘more than 50 percent’’ shall be sub-
stituted for the phrase ‘‘at least 80 per-
cent’’ each place it appears in such
subsection.
(ii) 
NONINCORPORATED
PERSONS
UNDER COMMON CONTROL.—Under regula-
tions prescribed by the Secretary, principles
similar to the principles of clause (i) shall
apply to a group of persons under common
control where 1 or more of such persons is
not a corporation.
(7) OTHER LAW APPLICABLE.—All provisions of
law, including penalties, applicable with respect to
the taxes imposed by section 4081 of such Code in the
case of gasoline and section 4091 of such Code in the
case of diesel fuel shall, insofar as applicable and not
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inconsistent with the provisions of this subsection,
apply with respect to the floor stock taxes imposed by
paragraph (1) to the same extent as if such taxes were
imposed by such section 4081 or 4091.
Subpart B—Modifications to Tax on Diesel Fuel
SEC. 8242. MODIFICATIONS TO TAX ON DIESEL FUEL.
(a) IN GENERAL.—Subparts A and B of part III of
subchapter A of chapter 32 (relating to manufacturers ex-
cise taxes), as amended by subpart A, are amended to read
as follows:
‘‘Subpart A—Gasoline and Diesel Fuel
‘‘Sec. 4081. Imposition of tax.
‘‘Sec. 4082. Exemptions for diesel fuel.
‘‘Sec. 4083. Definitions and special rule.
‘‘Sec. 4084. Cross references.
‘‘SEC. 4081. IMPOSITION OF TAX.
‘‘(a) TAX IMPOSED.—
‘‘(1) TAX ON REMOVAL, ENTRY, OR SALE.—
‘‘(A) IN
GENERAL.—There is hereby im-
posed a tax at the rate specified in paragraph
(2) on—
‘‘(i) the removal of a taxable fuel from
any refinery,
‘‘(ii) the removal of a taxable fuel from
any terminal,
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‘‘(B) RATES.—For purposes of subpara-
graph (A)—
‘‘(i) the Highway Trust Fund financ-
ing rate is—
‘‘(I) 11.5 cents per gallon in the
case of gasoline, and
‘‘(II) 17.5 cents per gallon in the
case of diesel fuel,
‘‘(ii) the Leaking Underground Storage
Tank Trust Fund financing rate is 0.1 cent
per gallon, and
‘‘(iii) the deficit reduction rate is 6.8
cents per gallon (4.3 cents per gallon on
and after October 1, 1995).
‘‘(b) TREATMENT OF REMOVAL OR SUBSEQUENT SALE
BY BLENDER.—
‘‘(1) IN GENERAL.—There is hereby imposed a
tax at the rate specified in subsection (a) on taxable
fuel removed or sold by the blender thereof.
‘‘(2) CREDIT FOR TAX PREVIOUSLY PAID.—If—
‘‘(A) tax is imposed on the removal or sale
of a taxable fuel by reason of paragraph (1), and
‘‘(B) the blender establishes the amount of
the tax paid with respect to such fuel by reason
of subsection (a),
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HR 2264 EAS
the amount of the tax so paid shall be allowed as a
credit against the tax imposed by reason of para-
graph (1).
‘‘(c) TAXABLE FUELS MIXED WITH ALCOHOL AT RE-
FINERY, ETC.—
‘‘(1) REDUCED RATES.—
‘‘(A) IN GENERAL.—Under regulations pre-
scribed by the Secretary, subsection (a) shall be
applied by substituting rates which are the ap-
plicable fraction of the otherwise applicable rates
in the case of the removal or entry of any taxable
fuel for use in producing at the time of such re-
moval or entry a qualified alcohol mixture. Sub-
ject to such terms and conditions as the Sec-
retary may prescribe (including the application
of section 4101), the treatment under the preced-
ing sentence also shall apply to use in producing
such a mixture after the time of such removal or
entry.
‘‘(B) APPLICABLE FRACTION.—For purposes
of subparagraph (A), the applicable fraction is—
‘‘(i) in the case of a qualified alcohol
mixture which contains gasoline, the frac-
tion the numerator of which is 10 and the
denominator of which is—
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HR 2264 EAS
‘‘(I) 9 in the case of 10 percent
gasohol,
‘‘(II) 9.23 in the case of 7.7 per-
cent gasohol, and
‘‘(III) 9.43 in the case of 5.7 per-
cent gasohol, and
‘‘(ii) in the case of a qualified alcohol
mixture which does not contain gasoline,
10⁄9.
‘‘(2) LATER SEPARATION OF FUEL FROM QUALI-
FIED ALCOHOL MIXTURE.—If any person separates
the taxable fuel from a qualified alcohol mixture on
which tax was imposed under subsection (a) at the
otherwise applicable Highway Trust Fund financing
rate (or its equivalent) by reason of this subsection
(or with respect to which a credit or payment was al-
lowed or made by reason of section 6427(f)(1)), such
person shall be treated as the refiner of such taxable
fuel. The amount of tax imposed on any removal of
such fuel by such person shall be reduced by the
amount of tax imposed (and not credited or refunded)
on any prior removal or entry of such fuel.
‘‘(3) ALCOHOL; QUALIFIED ALCOHOL MIXTURE.—
For purposes of this subsection—
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HR 2264 EAS
‘‘(A) ALCOHOL.—The term ‘alcohol’ includes
methanol and ethanol but does not include alco-
hol produced from petroleum, natural gas, or
coal (including peat). Such term does not in-
clude alcohol with a proof of less than 190 (de-
termined without regard to any added dena-
turants).
‘‘(B) QUALIFIED ALCOHOL MIXTURE.—The
term ‘qualified alcohol mixture’ means—
‘‘(i) any mixture of gasoline with alco-
hol if at least 5.7 percent of such mixture
is alcohol, and
‘‘(ii) any mixture of diesel fuel with al-
cohol if at least 10 percent of such mixture
is alcohol.
‘‘(4) OTHERWISE APPLICABLE RATES FOR GASO-
LINE MIXTURES.—For purposes of this subsection—
‘‘(A) IN GENERAL.—In the case of the High-
way Trust Fund financing rate, the otherwise
applicable rate for gasoline in a qualified alcohol
mixture is—
‘‘(i) 6.1 cents a gallon for 10 percent
gasohol,
‘‘(ii) 7.342 cents a gallon for 7.7 per-
cent gasohol, and
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HR 2264 EAS
‘‘(iii) 8.422 cents a gallon for 5.7 per-
cent gasohol.
In the case of a mixture none of the alcohol in
which consists of ethanol, clauses (i), (ii), and
(iii) shall be applied by substituting ‘5.5 cents’
for ‘6.1 cents’, ‘6.88 cents’ for ‘7.342 cents’, and
‘8.08 cents’ for ‘8.422 cents’.
‘‘(B) 10 PERCENT GASOHOL.—The term ‘10
percent gasohol’ means any mixture of gasoline
with alcohol if at least 10 percent of such mix-
ture is alcohol.
‘‘(C) 7.7 PERCENT
GASOHOL.—The term
‘7.7 percent gasohol’ means any mixture of gaso-
line with alcohol if at least 7.7 percent, but not
10 percent or more, of such mixture is alcohol.
‘‘(D) 5.7 PERCENT
GASOHOL.—The term
‘5.7 percent gasohol’ means any mixture of gaso-
line with alcohol if at least 5.7 percent, but not
7.7 percent or more, of such mixture is alcohol.
‘‘(5) OTHERWISE APPLICABLE RATES FOR DIE-
SEL
FUEL
MIXTURES.—For purposes of this sub-
section, in the case of the Highway Trust Fund fi-
nancing rate, the otherwise applicable rate for diesel
fuel in a qualified alcohol mixture is 12.1 cents per
gallon (11.5 cents per gallon in the case of a qualified