26 U.S.C. § 1357 — Items not subject to regular tax; depreciation; interest

FEDERAL · 26 U.S.C. · Chapter 1

Items not subject to regular tax; depreciation; interest

Current through Pub. L. 119-102

Title 26 — Internal Revenue Code·Ch. 1 — NORMAL TAXES AND SURTAXES·Subch. R

(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 vess

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(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.

26 U.S.C. § 1357 (Items not subject to regular tax; depreciation; interest) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

Source Credit

History

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

Editorial Notes

Editorial Notes

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.

Statutory Notes and Related Subsidiaries

Effective Date
Section applicable to taxable years beginning after Oct. 22, 2004, see section 248(c) of Pub. L. 108–357, set out as an Effective Date of 2004 Amendments note under section 56 of this title.