§53510 Tax Treatment of Qualified Withdrawals and Basis of Property

Summary

Treat a qualified withdrawal as coming first from the capital account, then from the capital gain account, and last from the ordinary income account. If any of the withdrawal for a vessel, barge, or container comes from the ordinary income or capital gain accounts, the vessel’s tax basis is reduced by the same amount taken from those accounts. If money taken to pay loan principal comes from those accounts, equivalent basis reductions are applied to vessels, barges, and containers owned by the fund owner in the order set by joint regulations; any leftover amount is a nonqualified withdrawal. If property whose basis was reduced is later sold, gain up to the total basis reduction is treated as the kind of withdrawal described in section 53511(c)(1) on the sale date, unless a redeposit under joint regulations restores the fund.