26 U.S.C. § 1355: Definitions and special rules

The term “electing corporation” means any corporation for which an election is in effect under this subchapter. The term “electing group” means a controlled group of which one or more members is an electing corporation. 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. who operates one or more qualifying vessels, and who meets the shipping activity requirement in subsection (c). 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 6,000 deadweight tons used exclusively in the United States foreign trade during the period that the election under this subchapter is in effect. The term “United States flag vessel” means any vessel documented under the laws of the United States. The term “United States domestic trade” means the transportation of goods or passengers between places in the United States. 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. such vessel is owned by, or chartered (including a time charter) to, the person, or the person provides services for such vessel pursuant to an operating agreement, and such vessel is in use as a qualifying vessel during such period. the vessel is temporarily surplus to the person’s requirements and the term of the charter does not exceed 3 years, or 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 the vessel is used as a qualifying vessel by the person to whom ultimately chartered. 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. 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. 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. 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. each partner shall be treated as operating vessels operated by the partnership, each partner shall be treated as conducting the activities conducted by the partnership, and 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. that it has temporarily ceased to operate the qualifying vessel, and its intention to resume operating the qualifying vessel. 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. the electing corporation abandons its intention to resume operation of the qualifying vessel, or the electing corporation resumes operation of the qualifying vessel. 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 its intention to resume operation of the vessel in the United States foreign trade. 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. the electing corporation abandons its intention to resume operations of the vessel in the United States foreign trade, or the electing corporation resumes operation of the vessel in the United States foreign trade. 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. 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 subsection (f) shall not apply with respect to such vessel for such taxable year. 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 its intention to resume operation of the vessel in the United States foreign trade or qualified zone domestic trade. 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. the electing corporation abandons its intention to resume operations of the vessel in the United States foreign trade or qualified zone domestic trade, or the electing corporation resumes operation of the vessel in the United States foreign trade or qualified zone domestic trade. Subparagraph (A) shall not apply to any qualifying vessel which is operated in the United States domestic trade (other than qualified zone domestic trade) for more than 30 days during the taxable year. In the case of a qualifying vessel to which this subsection applies, the Secretary shall prescribe rules for the proper allocation of income, expenses, losses, and deductions between the qualified shipping activities and the other activities of such vessel. The term “qualified zone domestic trade” means the transportation of goods or passengers between places in the qualified zone if such transportation is in the United States domestic trade. The term “qualified zone” means the Great Lakes Waterway and the St. Lawrence Seaway. The Secretary shall prescribe such regulations as may be necessary or appropriate to carry out the purposes of this section.