February 26, 1981

You request a ruling on whether the federal fuel tax credit is subject to Massachusetts income taxation under General Laws Chapter 62.

Internal Revenue Code Section 39 provides a federal income tax credit for federal excise taxes paid on gasoline, special fuels, and lubricating oil used for certain purposes. Federal excise taxes paid or accrued on fuels used in business or for the production of income are deductible business expenses under Code Sections 162 or 212. The fuel tax credit is includible in federal gross income to the extent that a business deduction of fuel taxes resulted in a reduction of federal income taxes.

Massachusetts gross income is federal gross income with certain modifications not here relevant. (M.G.L. c. 62, s. 2(a)).

Based on the foregoing, it is ruled that the amount of the fuel tax credit is includible in Massachusetts gross income to the extent that it is included in federal gross income.

Very truly yours,

/s/L. Joyce Hampers

L. Joyce Hampers

Commissioner of Revenue

JH: DMH: mf

LR 81-19