### Question
How does the law define qualified ethanol fuel production?


### Answer
Under *26 U.S.C. § 40*, **qualified ethanol fuel production** is defined as:

> any alcohol which is ethanol which is produced by an eligible small ethanol producer, and which during the taxable year—


(i) is sold by such producer to another person—


(I) for use by such other person in the production of a qualified mixture in such other person's trade or business (other than casual off-farm production),


(II) for use by such other person as a fuel in a trade or business, or


(III) who sells such ethanol at retail to another person and places such ethanol in the fuel tank of such other person, or


  

(ii) is used or sold by such producer for any purpose described in clause (i)

#### Citation:
  - *26 U.S.C. § 40*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter A-Determination of Tax Liability > PART IV-CREDITS AGAINST TAX > Subpart D-Business Related Credits**

