§1356 — Title 26 Internal Revenue Code | U.S. Code

Summary

Defines which shipping work counts for the tax rules. It says qualifying shipping activities include three kinds: core, qualifying secondary, and qualified incidental. Core activities mean running ships that operate in United States foreign trade. Qualifying secondary activities are other shipping businesses that support that core work but only count if the money they make is no more than 20 percent of the money from the core activities. Secondary examples include managing other ships, providing vessel/barge/container/cargo facilities or services, owning or operating supporting equipment (like barges, containers, chassis), moving cargo inland for those ships, and terminal, maintenance, repair, or logistics work, plus any other activities the Treasury adds by regulation. Qualified incidental activities are other shipping-related tasks that are minor, are not secondary activities, and bring in no more than 0.1 percent of the core activity income. If a group of related companies elects together, the 20 percent and 0.1 percent limits are figured for the group as one entity and then split among the companies.

Title 26, §1356

Internal Revenue Code — Source: USLM XML via OLRC

(a)For purposes of this subchapter, the term “qualifying shipping activities” means—

(1)core qualifying activities,

(2)qualifying secondary activities, and

(3)qualifying incidental activities.

(b)For purposes of this subchapter, the term “core qualifying activities” means activities in operating qualifying vessels in United States foreign trade.

(c)For purposes of this section—

(1)The term “qualifying secondary activities” means secondary activities but only to the extent that, without regard to this subchapter, the gross income derived by such corporation from such activities does not exceed 20 percent of the gross income derived by the corporation from its core qualifying activities.

(2)The term “secondary activities” means—

(A)the active management or operation of vessels other than qualifying vessels in the United States foreign trade,

(B)the provision of vessel, barge, container, or cargo-related facilities or services to any person,

(C)other activities of the electing corporation and other members of its electing group that are an integral part of its business of operating qualifying vessels in United States foreign trade, including—

(i)ownership or operation of barges, containers, chassis, and other equipment that are the complement of, or used in connection with, a qualifying vessel in United States foreign trade,

(ii)the inland haulage of cargo shipped, or to be shipped, on qualifying vessels in United States foreign trade, and

(iii)the provision of terminal, maintenance, repair, logistical, or other vessel, barge, container, or cargo-related services that are an integral part of operating qualifying vessels in United States foreign trade, and

(D)such other activities as may be prescribed by the Secretary pursuant to regulations.

(d)For purposes of this section, the term “qualified incidental activities” means shipping-related activities if—

(1)they are incidental to the corporation’s core qualifying activities,

(2)they are not qualifying secondary activities, and

(3)without regard to this subchapter, the gross income derived by such corporation from such activities does not exceed 0.1 percent of the corporation’s gross income from its core qualifying activities.

(e)In the case of an electing group, subsections (c)(1) and (d)(3) shall be applied as if such group were 1 entity, and the limitations under such subsections shall be allocated among the corporations in such group.

Notes & Related Subsidiaries

Editorial Notes

Amendments

2005—Subsec. (c)(2). Pub. L. 109–135, § 403(g)(3)(B), inserted concluding provisions. Subsec. (c)(3). Pub. L. 109–135, § 403(g)(3)(A), struck out heading and text of par. (3). Text read as follows: “(A) In general.—Such term shall not include any core qualifying activities. “(B) Nonelecting corporations.—In the case of a corporation (other than an electing corporation) which is a member of an electing group, any core qualifying activities of the corporation shall be treated as qualifying secondary activities (and not as core qualifying activities).”

Statutory Notes and Related Subsidiaries

Effective Date

of 2005 Amendment

Amendments

by Pub. L. 109–135 effective as if included in the provisions of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which they relate, see section 403(nn) of Pub. L. 109–135, set out as a note under section 26 of this title.

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.

§1356 Qualifying Shipping Activities

Summary

Title 26, §1356

Notes & Related Subsidiaries

Editorial Notes

Amendments

Statutory Notes and Related Subsidiaries

Effective Date

Amendments

Effective Date

Effective Date

Amendments

Citations & Metadata