26 U.S.C. § 1355 : US Code - Section 1355: Definitions and special rules

Search 26 U.S.C. § 1355 : US Code - Section 1355: Definitions and special rules

(a) Definitions
For purposes of this subchapter -
(1) Electing corporation
The term "electing corporation" means any corporation for which
an election is in effect under this subchapter.
(2) Electing group; controlled group
(A) Electing group
The term "electing group" means a controlled group of which
one or more members is an electing corporation.
(B) Controlled group
The term "controlled group" means any group which would be
treated as a single employer under subsection (a) or (b) of
section 52 if paragraphs (1) and (2) of section 52(a) did not
apply.
(3) Qualifying vessel operator
The term "qualifying vessel operator" means any corporation -
(A) who operates one or more qualifying vessels, and
(B) who meets the shipping activity requirement in subsection
(c).
(4) Qualifying vessel
The term "qualifying vessel" means a self-propelled (or a
combination self-propelled and non-self-propelled) United States
flag vessel of not less than 10,000 deadweight tons used
exclusively in the United States foreign trade during the period
that the election under this subchapter is in effect.
(5) United States flag vessel
The term "United States flag vessel" means any vessel
documented under the laws of the United States.
(6) United States domestic trade
The term "United States domestic trade" means the
transportation of goods or passengers between places in the
United States.
(7) United States foreign trade
The term "United States foreign trade" means the transportation
of goods or passengers between a place in the United States and a
foreign place or between foreign places.
(b) Operating a vessel
For purposes of this subchapter -
(1) In general
Except as provided in paragraph (2), a person is treated as
operating any vessel during any period if -
(A)(i) such vessel is owned by, or chartered (including a
time charter) to, the person, or
(ii) the person provides services for such vessel pursuant to
an operating agreement, and
(B) such vessel is in use as a qualifying vessel during such
period.
(2) Bareboat charters
A person is treated as operating and using a vessel that it has
chartered out on bareboat charter terms only if -
(A)(i) the vessel is temporarily surplus to the person's
requirements and the term of the charter does not exceed 3
years, or
(ii) the vessel is bareboat chartered to a member of a
controlled group which includes such person or to an unrelated
person who sub-bareboats or time charters the vessel to such a
member (including the owner of the vessel), and
(B) the vessel is used as a qualifying vessel by the person
to whom ultimately chartered.
(c) Shipping activity requirement
For purposes of this section -
(1) In general
Except as otherwise provided in this subsection, a corporation
meets the shipping activity requirement of this subsection for
any taxable year only if the requirement of paragraph (4) is met
for each of the 2 preceding taxable years.
(2) Special rule for 1st year of election
A corporation meets the shipping activity requirement of this
subsection for the first taxable year for which the election
under section 1354(a) is in effect only if the requirement of
paragraph (4) is met for the preceding taxable year.
(3) Controlled groups
A corporation who is a member of a controlled group meets the
shipping activity requirement of this subsection only if such
requirement is met determined by treating all members of such
group as 1 person.
(4) Requirement
The requirement of this paragraph is met for any taxable year
if, on average during such year, at least 25 percent of the
aggregate tonnage of qualifying vessels used by the corporation
were owned by such corporation or chartered to such corporation
on bareboat charter terms.
(d) Activities carried on partnerships, etc.
In applying this subchapter to a partner in a partnership -
(1) each partner shall be treated as operating vessels operated
by the partnership,
(2) each partner shall be treated as conducting the activities
conducted by the partnership, and
(3) the extent of a partner's ownership, charter, or operating
agreement interest in any vessel operated by the partnership
shall be determined on the basis of the partner's interest in the
partnership.
A similar rule shall apply with respect to other pass-thru
entities.
(e) Effect of temporarily ceasing to operate a qualifying vessel
(1) In general
For purposes of subsections (b) and (c), an electing
corporation shall be treated as continuing to use a qualifying
vessel during any period of temporary cessation if the electing
corporation gives timely notice to the Secretary stating -
(A) that it has temporarily ceased to operate the qualifying
vessel, and
(B) its intention to resume operating the qualifying vessel.
(2) Notice
Notice shall be deemed timely if given not later than the due
date (including extensions) for the corporation's tax return for
the taxable year in which the temporary cessation begins.
(3) Period disregard in effect
The period of temporary cessation under paragraph (1) shall
continue until the earlier of the date on which -
(A) the electing corporation abandons its intention to resume
operation of the qualifying vessel, or
(B) the electing corporation resumes operation of the
qualifying vessel.
(f) Effect of temporarily operating a qualifying vessel in the
United States domestic trade
(1) In general
For purposes of this subchapter, an electing corporation shall
be treated as continuing to use a qualifying vessel in the United
States foreign trade during any period of temporary use in the
United States domestic trade if the electing corporation gives
timely notice to the Secretary stating -
(A) that it temporarily operates or has operated in the
United States domestic trade a qualifying vessel which had been
used in the United States foreign trade, and
(B) its intention to resume operation of the vessel in the
United States foreign trade.
(2) Notice
Notice shall be deemed timely if given not later than the due
date (including extensions) for the corporation's tax return for
the taxable year in which the temporary cessation begins.
(3) Period disregard in effect
The period of temporary use under paragraph (1) continues until
the earlier of the date of (!1) which -
(A) the electing corporation abandons its intention to resume
operations of the vessel in the United States foreign trade, or
(B) the electing corporation resumes operation of the vessel
in the United States foreign trade.
(4) No disregard if domestic trade use exceeds 30 days
Paragraph (1) shall not apply to any qualifying vessel which is
operated in the United States domestic trade for more than 30
days during the taxable year.
(g) Regulations
The Secretary shall prescribe such regulations as may be
necessary or appropriate to carry out the purposes of this section.