Page:United States Statutes at Large Volume 84 Part 1.djvu/1087

 84 STAT. ]

PUBLIC LAW 91-469-OCT. 21, 1970

" (A) amounts representing capital gains on assets held for more than 6 months and referred to in subsection (b)(1)(C) or (b)(1)(D) reduced by " (B) amounts representing capital losses on assets held in the fund for more than 6 months. " (4) The ordinary income account shall consist of— " (A) amounts referred to in subsection (b)(1)(A), " (B)(i) amounts representing capital gains on assets held for 6 months or less and referred to in subsection (b)(1)(C) or (b) (1)(D), reduced by— "(ii) amounts representing capital losses on assets held m the fund for 6 months or less, " (C) interest (not including any tax-exempt interest referred to in paragraph (2)(D)) and other ordinary income (not including any dividend referred to in subparagraph (E)) received on assets held in the fund, " (D) ordinary income from a transaction described in subsection (b)(1)(C), and " (E) 15 percent of any dividend referred to in paragraph (2)(C). "(5) Except on termination of a fund, capital losses referred to m paragraph (3)(B) or in paragraph (4)(B) (ii) shall be allowed only as an offset to gains referred to in paragraph (3)(A) or (4)(B) (i), respectively. " (f) Purposes of Qualified Withdrawals. "(1) A qualified withdrawal from the fund is one made in accordance with the terms of the agreement but only if it is for: " (A) the acquisition, construction, or reconstruction of a qualified vessel, " (B) the acquisition, construction, or reconstruction of barges and containers which are part of the complement of a qualified vessel, or " (C) the payment of the principal on indebtedness incurred in connection with the acquisition, construction or reconstruction of a qualified vessel or a barge or container which is part of the complement of a qualified vessel. Except to the extent provided in regulations prescribed by the Secretary of Commerce, subparagraph (B), ^ n d so much of subparagraph (C) as relates only to barges and containers, shall apply only with respect to barges and containers constructed in the United States. "(2) Under joint regulations, if the Secretary of Commerce determines that any substantial obligation under any agreement is not being fulfilled, he may, after notice and opportunity for hearing to the person maintaining the fund, treat the entire fund or any portion thereof as an amount withdrawn from the fund in a nonqualified withdrawal. " (g) Tax Treatment of Qualified Withdrawals. " (1) Any qualified withdrawal from a fund shall be treated— " (A) first as made out of the capital account, " (B) second as made out of the capital gain account, and " (C) third as made out of the ordinary income account. "(2) If any portion of a qualified withdrawal for a vessel, barge, or container is made out of the ordinary income account, the basis of such vessel, barge, or container shall be reduced by an amount equal to such portion. "(3) If any portion of a qualified withdrawal for a vessel, barge, or container is made out of the capital gain account, the basis of such

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