Page:United States Statutes at Large Volume 120.djvu/1619

 120 STAT. 1588

PUBLIC LAW 109–304—OCT. 6, 2006 ‘‘(2) owns, in whole or in part, a vessel being operated in the foreign or domestic commerce of the United States or in the fisheries; ‘‘(3) was operating a vessel in the foreign or domestic commerce of the United States or in the fisheries when it was bought or requisitioned by the United States Government; ‘‘(4) owned, in whole or in part, a vessel being operated in the foreign or domestic commerce of the United States or in the fisheries when it was bought or requisitioned by the Government; or ‘‘(5) had acquired or was having constructed a vessel to operate in the foreign or domestic commerce of the United States or in the fisheries when it was bought or requisitioned by the Government.

‘‘§ 53304. Vessel ownership ‘‘In this chapter, a vessel is deemed to be constructed or acquired by a taxpayer if constructed or acquired by a corporation when the taxpayer owns at least 95 percent of each class of stock of the corporation. ‘‘§ 53305. Eligible fund deposits ‘‘A construction reserve fund may include deposits of— ‘‘(1) the proceeds from the sale of a vessel; ‘‘(2) indemnities for the loss of a vessel; ‘‘(3) earnings from the operation of a documented vessel and from services incident to the operation; and ‘‘(4) interest or other amounts accrued on deposits in the fund.

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VerDate 14-DEC-2004

13:05 Jul 12, 2007

‘‘§ 53306. Recognition of gain for tax purposes ‘‘(a) DEFINITIONS.—In this section, the terms ‘net proceeds’ and ‘net indemnity’ mean the sum of— ‘‘(1) the adjusted basis of the vessel; and ‘‘(2) the amount of gain the taxpayer would recognize without regard to this section. ‘‘(b) RECOGNITION OF GAIN.—In computing net income under the income or excess profits tax laws of the United States, a taxpayer does not recognize a gain on the sale or the actual or constructive total loss of a vessel if the taxpayer— ‘‘(1) deposits an amount equal to the net proceeds of the sale or the net indemnity for the loss in a construction reserve fund within 60 days after receiving the payment of proceeds or indemnity; and ‘‘(2) elects under this section not to recognize the gain. ‘‘(c) WHEN ELECTION MUST BE MADE.— ‘‘(1) IN GENERAL.—Except as provided in paragraph (2), the taxpayer must make the election referred to in subsection (b) in the taxpayer’s income tax return for the taxable year in which the gain was realized. ‘‘(2) RECEIPT AFTER TAXABLE YEAR.—If the vessel is bought or requisitioned by the United States Government, or is lost, and the taxpayer receives payment for the vessel or indemnity for the loss from the Government after the end of the taxable year in which it was bought, requisitioned, or lost, the taxpayer must make the election referred to in subsection (b) within

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