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Title 26 — Internal Revenue CodeRelease 119-73

§1358 Allocation of Credits, Income, and Deductions

Title 26 › Subtitle Subtitle A— Income Taxes › Chapter 1— NORMAL TAXES AND SURTAXES › Subchapter R— Election To Determine Corporate Tax on Certain International Shipping Activities Using Per Ton Rate › § 1358

Last updated Apr 6, 2026|Official source

Summary

For a shipping company that elects the tonnage tax, its qualifying shipping activities are treated as a separate business apart from everything else it does. No deductions are allowed against its notional shipping income, and no credits can offset the tonnage tax. Net operating losses from shipping activities cannot be carried forward from years before the election. The transfer-pricing rules of section 482 apply between the electing company and other persons, and between its shipping activities and its other activities.

Full Legal Text

Title 26, §1358

Internal Revenue Code — Source: USLM XML via OLRC

(a)For purposes of this chapter, the qualifying shipping activities of an electing corporation shall be treated as a separate trade or business activity distinct from all other activities conducted by such corporation.
(b)(1)No deduction shall be allowed against the notional shipping income of an electing corporation, and no credit shall be allowed against the tax imposed by section 1352(2).
(2)No deduction shall be allowed for any net operating loss attributable to the qualifying shipping activities of any person to the extent that such loss is carried forward by such person from a taxable year preceding the first taxable year for which such person was an electing corporation.
(c)section 482 applies in accordance with this subsection to a transaction or series of transactions—
(1)as between an electing corporation and another person, or
(2)as between a person’s qualifying shipping activities and other activities carried on by it.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

Amendments

2018—Subsec. (b)(1). Pub. L. 115–141, § 401(a)(188), substituted “section 1352(2)” for “section 1352(a)(2)”. Subsec. (c)(2). Pub. L. 115–141, § 401(a)(189), substituted “a person’s” for “an person’s”.

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.

Reference

Citations & Metadata

Citation

26 U.S.C. § 1358

Title 26 — Internal Revenue Code

Last Updated

Apr 6, 2026

Release point: 119-73