26 U.S.C. § 1357 : US Code - Section 1357: Items not subject to regular tax; depreciation; interest

Search 26 U.S.C. § 1357 : US Code - Section 1357: Items not subject to regular tax; depreciation; interest

(a) Exclusion from gross income
Gross income of an electing corporation shall not include its
income from qualifying shipping activities.
(b) Electing group member
Gross income of a corporation (other than an electing
corporation) which is a member of an electing group shall not
include its income from qualifying shipping activities conducted by
such member.
(c) Denial of losses, deductions, and credits
(1) General rule
Subject to paragraph (2), each item of loss, deduction (other
than for interest expense), or credit of any taxpayer with
respect to any activity the income from which is excluded from
gross income under this section shall be disallowed.
(2) Depreciation
(A) In general
Notwithstanding paragraph (1), the adjusted basis (for
purposes of determining gain) of any qualifying vessel shall be
determined as if the deduction for depreciation had been
allowed.
(B) Method
(i) In general
Except as provided in clause (ii), the straight-line method
of depreciation shall apply to qualifying vessels the income
from operation of which is excluded from gross income under
this section.
(ii) Exception
Clause (i) shall not apply to any qualifying vessel which
is subject to a charter entered into before the date of the
enactment of this subchapter.
(3) Interest
(A) In general
Except as provided in subparagraph (B), the interest expense
of an electing corporation shall be disallowed in the ratio
that the fair market value of such corporation's qualifying
vessels bears to the fair market value of such corporation's
total assets.
(B) Electing group
In the case of a corporation which is a member of an electing
group, the interest expense of such corporation shall be
disallowed in the ratio that the fair market value of such
corporation's qualifying vessels bears to the fair market value
of the electing groups total assets.