46 U.S.C. § 53310 — Obligation of deposits and period for construction of certain vessels

(a) Application of Sections 53306 and 53309. Those two sections' tax benefits apply to a fund deposit only if, within 3 years of the deposit (plus any extension under subsection (c)): (1)(A) the taxpayer signs a contract to build or acquire a new vessel — or, with the Secretary's approval, a part interest in one, or to rebuild or recondition one — (B) the deposit is spent or committed under that contract, (C) at least 12.5 percent of the vessel's price is paid or irrevocably committed, and (D) the Secretary approves the plans and specifications to whatever extent the Secretary thinks necessary; or (2) the deposit is instead spent or committed to pay off existing or new purchase-money debt on a new vessel, owed to someone who is not the mortgagor's parent company or an affiliated company. (b) Additional Requirements for Certain Vessels. For a vessel not built under a construction-differential subsidy contract and not bought from the Secretary of Transportation, beyond subsection (a)(1): (1) at least 5 percent of construction — of the first vessel, if the contract covers more than one — must be finished within 6 months of the contract date, or within any extension under subsection (c), as the Secretary estimates and certifies to the Treasury; and (2) construction after that must keep moving with reasonable speed. (c) Extensions. The Secretary of Transportation may extend the deadline for spending or committing the deposit, or for reaching the 5 percent construction milestone. But total extensions cannot exceed 2 years for spending or committing the money, or 1 year for construction progress.