View all text of Subchapter R [§ 1352 - § 1359]
§ 1355. Definitions and special rules
(a) Definitions
For purposes of this subchapter—
(1) Electing corporation
(2) Electing group; controlled group
(A) Electing group
(B) Controlled group
(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
(5) United States flag vessel
(6) United States domestic trade
(7) United States foreign trade
(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
(2) Special rule for 1st year of election
(3) Controlled groups
(4) Requirement
(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
(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
(3) Period disregard in effect
The period of temporary use under paragraph (1) continues until the earlier of the date on 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
(g) Great Lakes domestic shipping to not disqualify vessel
(1) In general
If the electing corporation elects (at such time and in such manner as the Secretary may require) to apply this subsection for any taxable year to any qualifying vessel which is used in qualified zone domestic trade during the taxable year—
(A) solely for purposes of subsection (a)(4), such use shall be treated as use in United States foreign trade (and not as use in United States domestic trade), and
(B) subsection (f) shall not apply with respect to such vessel for such taxable year.
(2) Effect of temporarily operating vessel in United States domestic trade
In the case of a qualifying vessel to which this subsection applies—
(A) In general
An electing corporation shall be treated as using such vessel in qualified zone domestic trade during any period of temporary use in the United States domestic trade (other than qualified zone domestic trade) if the electing corporation gives timely notice to the Secretary stating—
(i) that it temporarily operates or has operated in the United States domestic trade (other than qualified zone domestic trade) a qualifying vessel which had been used in the United States foreign trade or qualified zone domestic trade, and
(ii) its intention to resume operation of the vessel in the United States foreign trade or qualified zone domestic trade.
(B) Notice
(C) Period disregard in effect
The period of temporary use under subparagraph (A) continues until the earlier of the date of which—
(i) the electing corporation abandons its intention to resume operations of the vessel in the United States foreign trade or qualified zone domestic trade, or
(ii) the electing corporation resumes operation of the vessel in the United States foreign trade or qualified zone domestic trade.
(D) No disregard if domestic trade use exceeds 30 days
(3) Allocation of income and deductions to qualifying shipping activities
(4) Qualified zone domestic trade
For purposes of this subsection—
(A) In general
(B) Qualified zone
(h) Regulations
(Added Pub. L. 108–357, title II, § 248(a), Oct. 22, 2004, 118 Stat. 1452; amended Pub. L. 109–135, title IV, § 403(g)(1)(B)–(2), Dec. 21, 2005, 119 Stat. 2624; Pub. L. 109–222, title II, § 205(a), May 17, 2006, 120 Stat. 350; Pub. L. 109–432, div. A, title IV, §§ 413(a), 415(a), Dec. 20, 2006, 120 Stat. 2963; Pub. L. 115–141, div. U, title IV, § 401(a)(187), Mar. 23, 2018, 132 Stat. 1193.)