eLaws | eCases | Code of Federal Regulations | Federal Register | Federal Courts |
 United States Code (Last Updated: May 24, 2014)
 Title 26. INTERNAL REVENUE CODE
 SubTitle A. Income Taxes
 Chapter 1. NORMAL TAXES AND SURTAXES
 SubChapter R. Election To Determine Corporate Tax on Certain International Shipping Activities Using Per Ton Rate

  § 1357. Items not subject to regular tax; depreciation; interest  

Latest version.
  • (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.
(Added Pub. L. 108–357, title II, § 248(a), Oct. 22, 2004, 118 Stat. 1455.)

References In Text

References in Text

The date of the enactment of this subchapter, referred to in subsec. (c)(2)(B)(ii), is the date of enactment of Pub. L. 108–357, which was approved Oct. 22, 2004.