Title 46 — ShippingRelease 119-73
§57307 Recognition of gain for tax purposes
Title 46 › Subtitle Subtitle V— - Merchant Marine › Part Part F— - Government-Owned Merchant Vessels › Chapter CHAPTER 573— - VESSEL TRADE-IN PROGRAM › § 57307
Summary
Trading an obsolete vessel to the Secretary of Transportation for a trade‑in allowance under this chapter creates no taxable gain. The new vessel’s tax basis is the old vessel’s basis plus (cost minus the trade‑in allowance) minus any loss reported on the transfer.
Full Legal Text
Title 46, §57307
Shipping — Source: USLM XML via OLRC
The owner of an obsolete vessel does not recognize a gain under the Federal income tax laws when the vessel is transferred to the Secretary of Transportation in exchange for a trade-in allowance under this chapter. The basis of the new vessel acquired with the allowance is the same as the basis of the obsolete vessel—
(1)increased by the difference between the cost of the new vessel and the trade-in allowance of the obsolete vessel; and
(2)decreased by the amount of loss recognized on the transfer.
Legislative History
Notes & Related Subsidiaries
Historical and Revision Notes
Revised SectionSource (U.S. Code)Source (Statutes at Large) 5730746 App.:1160(e).June 29, 1936, ch. 858, title V, § 510(e), as added Aug. 4, 1939, ch. 417, § 7, 53 Stat. 1184; Pub. L. 97–31, § 12(91), Aug. 6, 1981, 95 Stat. 161. The words “for gain or loss upon a sale or exchange and for depreciation under the applicable Federal income-tax laws” and “or vessels exchanged for credit upon the acquisition of such new vessel” are omitted as unnecessary. In paragraph (1), the words “the difference between the cost of the new vessel and the trade-in allowance of the obsolete vessel” are substituted for “the amount of the cost of such vessel (other than the cost represented by such obsolete vessel or vessels)” for clarity.
Reference
Citations & Metadata
Citation
46 U.S.C. § 57307
Title 46 — Shipping
Last Updated
Apr 6, 2026
Release point: 119-73