Basque Station, Inc. v. United States
Opinion
Lead Opinion
MEMORANDUM **
I. Taxable Sale
The district court erred in determining that a taxable sale did not occur between Basque Station, Inc. (“Basque”) and Transport Petroleum (“Transport”). Former I.R.C. Section 4091(a) imposed an excise tax on the “sale” of diesel fuel “by a producer.” 26 U.S.C. § 4091 (a)(1990). 1 “Sale” is defined in the regulations as:
26 C.F.R. § 48.0-2 (a)(5).
A. Transfer of Property
The district court found that Basque did not transfer property to Transport within the meaning of the regulations, believing there was no evidence that Basque “had, at any time, possession, control or ownership of the diesel fuel which was delivered to Transport.” It is, however, undisputed that Basque was in a contractual relationship with Texaco and was legally obligated to pay for the entire shipment, whereas Transport was not in any contractual relationship with Texaco and Texaco had no recourse against Transport for payment. When orders were placed with Texaco using Basque’s identification numbers, Basque became the owner of the entire shipment and could then do what it wished with the fuel.
That Transport’s trucks would actually pick up the fuel from Texaco does not alter…