46 U.S.C. § 53510 — Tax treatment of qualified withdrawals and basis of property
submitted 20 years ago by Pub. L. 109-304 to r/title-46-SHIPPING · 344 words · no verdicts yet
Qualified withdrawals draw first from the capital account, then the capital gain account, then the ordinary income account. Withdrawals from the last two accounts reduce the tax basis of the vessel, barge, or container bought. Selling that property later can trigger extra tax, unless the fund holder redeposits money to restore the fund.
(a) Order of Withdrawals. A qualified withdrawal is treated as coming, in order: (1) first from the capital account; (2) second from the capital gain account; and (3) third from the ordinary income account.
(b) Ordinary Income Account Withdrawals. If part of a qualified withdrawal for a vessel*, barge*, or container comes from the ordinary income account, that property's basis (its value for tax purposes) is reduced by that amount.
(c) Capital Gain Account Withdrawals. The same basis reduction happens for the part of a qualified withdrawal that comes from the capital gain account.
(d) Withdrawals To Pay Principal. If part of a withdrawal used to pay down debt principal comes from the ordinary income or capital gain account, the same total basis reduction that would apply under (b) and (c) must be applied, in the order set by joint regulations*, to reduce the basis of the vessels, barges, and containers the fund holder owns. Any amount left over is treated as a nonqualified withdrawal.
(e) Gain on Property With Reduced Basis. If property whose basis was reduced under (b), (c), or (d) is later sold or disposed of, any gain on that disposal — up to the total basis reduction — is treated as withdrawn under section 53511(c)(1) on the date of disposal. This rule doesn't apply if the fund holder redeposits an amount (set under joint regulations) that restores the fund close to its position before the withdrawal, subject to conditions in those regulations.
A qualified withdrawal from a capital construction fund shall be treated as made—
first from the capital account;
second from the capital gain account; and
third from the ordinary income account.
If a portion of a qualified withdrawal for a vessel*, barge*, or container is made from the ordinary income account, the basis of the vessel, barge, or container shall be reduced by an amount equal to that portion.
If a portion of a qualified withdrawal for a vessel, barge, or container is made from the capital gain account, the basis of the vessel, barge, or container shall be reduced by an amount equal to that portion.
If a portion of a qualified withdrawal to pay the principal on indebtedness is made from the ordinary income account or the capital gain account, an amount equal to the total reduction that would be required by subsections (b) and (c) if the withdrawal were a qualified withdrawal for a purpose described in those subsections shall be applied, in the order provided in joint regulations*, to reduce the basis of vessels, barges, and containers owned by the person maintaining the fund. The remaining amount of the withdrawal shall be treated as a nonqualified withdrawal.
If property, the basis of which was reduced under subsection (b), (c), or (d), is disposed of, any gain realized on the disposition, to the extent it does not exceed the total reduction in the basis of the property under those subsections, shall be treated as an amount referred to in section 53511(c)(1) of this title withdrawn on the date of disposition of the property. Subject to conditions prescribed in joint regulations, this subsection does not apply to a disposition if there is a redeposit, in an amount determined under joint regulations, that restores the fund as far as practicable to the position it was in before the withdrawal.
Source credit: (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1596.)
- 2006Enacted · Pub. L. 109-304 · 120 Stat. 1596
A history note hasn’t been published yet. The record shows enactment by Pub. L. 109-304 on 2006-10-06.
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