PRIA Logo™
Title 46, ShippingRelease 119-110

§53507 Nontaxation of Deposits

Title 46 › Subtitle V — Merchant Marine › Part C — Financial Assistance Programs › CHAPTER 535 — CAPITAL CONSTRUCTION FUNDS › § 53507

Last updated Sep 22, 2026|Official source

Summary

For federal income tax, money put into the fund is protected in several ways. The amount deposited cuts the depositor’s taxable income. If net proceeds from a covered sale are put into the fund, that gain is not counted. Investment earnings inside the fund (gains or losses) are ignored for tax. A corporation’s earnings and profits are calculated without counting these fund rules. Money in the fund also is not counted when applying the tax in section 531 of the tax code. These tax benefits only apply if the deposit is made under the agreement and within the time limits set by joint regulations.

Full Legal Text

Title 46, §53507

Shipping, Source: USLM XML via OLRC

(a)Tax Treatment.—
Subject to subsection (b), under the Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.)—
(1)taxable income (determined without regard to this chapter and section 7518 of such Code (26 U.S.C. 7518)) for the taxable year shall be reduced by the amount deposited for the taxable year out of amounts referred to in section 53505(a)(1) of this title;
(2)a gain from a transaction referred to in section 53505(a)(3) of this title shall not be taken into account if an amount equal to the net proceeds (as defined in joint regulations) from the transaction is deposited in the fund;
(3)the earnings (including gains and losses) from the investment and reinvestment of amounts held in the fund shall not be taken into account;
(4)the earnings and profits of a corporation (within the meaning of section 316 of such Code (26 U.S.C. 316)) shall be determined without regard to this chapter and section 7518 of such Code (26 U.S.C. 7518); and
(5)in applying the tax imposed by section 531 of such Code (26 U.S.C. 531), amounts held in the fund shall not be taken into account.
(b)Condition.—
This section applies to an amount only if the amount is deposited in the fund under the agreement within the time provided in joint regulations.

Legislative History

Notes & Related Subsidiaries

Historical and Revision Notes

Revised SectionSource (U.S. Code)Source (Statutes at Large) 5350746 App.:1177(d).June 29, 1936, ch. 858, title VI, § 607(d), 49 Stat. 2005; June 23, 1938, ch. 600, §§ 23–28, 52 Stat. 960; Aug. 4, 1939, ch. 417, § 10, 53 Stat. 1185; July 17, 1952, ch. 939, §§ 17–19, 66 Stat. 764; Pub. L. 85–637, Aug. 14, 1958, 72 Stat. 216; Pub. L. 86–518, § 1, June 12, 1960, 74 Stat. 216; Pub. L. 87–45, § 6, May 27, 1961, 75 Stat. 91; Pub. L. 87–271, Sept. 21, 1961, 75 Stat. 570; restated Pub. L. 91–469, § 21(a), Oct. 21, 1970, 84 Stat. 1028; Pub. L. 99–514, title II, § 261(e)(1), (2), Oct. 22, 1986, 100 Stat. 2215.

Reference

Citations & Metadata

Citation

46 U.S.C. § 53507

Title 46, Shipping

Last Updated

Sep 22, 2026

Release point: 119-110