46 U.S.C. § 57307 — Recognition of gain for tax purposes

Page 516 TITLE 46—SHIPPING § 57304 HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 57303 .......... 46 App.:1160(c). June 29, 1936, ch. 858, title V, § 510(c), as added Aug. 4, 1939, ch. 417, § 7, 53 Stat. 1184; Pub. L. 97–31, § 12(91), Aug. 6, 1981, 95 Stat. 161. § 57304. Eligible acquisition dates At the option of the owner, the acquisition of an obsolete vessel under this chapter shall occur— (1) when the owner contracts for the con- struction or purchase of a new vessel; or (2) within 5 days of the actual date of deliv- ery of the new vessel to the owner. (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1662.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 57304 .......... 46 App.:1160(b) (2d sentence). June 29, 1936, ch. 858, title V, § 510(b) (2d sentence), as added Aug. 4, 1939, ch. 417, § 7, 53 Stat. 1184; Pub. L. 87–401, subdiv. (1), Oct. 5, 1961, 75 Stat. 833; Pub. L. 91–469, § 35(a), Oct. 21, 1970, 84 Stat. 1035; Pub. L. 97–31, § 12(91), Aug. 6, 1981, 95 Stat. 161. The words ‘‘At the option of the owner’’ are sub- stituted for ‘‘if the owner so requests’’ for clarity. § 57305. Determination of trade-in allowance (a) IN GENERAL.—The Secretary of Transpor- tation shall determine the trade-in allowance for an obsolete vessel at the time of acquisition of the vessel. The allowance shall be the fair value of the vessel. In determining the value, the Secretary shall consider— (1) the scrap value of the obsolete vessel in American and foreign markets; (2) the depreciated value based on a 20-year or 25-year life, whichever applies to the obso- lete vessel; and (3) the market value of the obsolete vessel for operation in world commerce or in the do- mestic or foreign commerce of the United States. (b) USE OF OBSOLETE VESSELS.—If acquisition of the obsolete vessel occurs when the owner contracts for the construction of the new vessel, and the owner uses the obsolete vessel during the period of construction of the new vessel, the Secretary shall reduce the trade-in allowance by an amount representing the fair value of that use. The Secretary shall establish the rate for use of the obsolete vessel when the contract for construction of the new vessel is made. (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1663.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 57305(a) ...... 46 App.:1160(b) (3d sentence), (d) (1st, 2d sentences). June 29, 1936, ch. 858, title V, § 510(b) (3d sentence), (d), as added Aug. 4, 1939, ch. 417, § 7, 53 Stat. 1184; July 17, 1952, ch. 939, § 8, 66 Stat. 762; Pub. L. 86–518, § 1, June 12, 1960, 74 Stat. 216; Pub. L. 87–401, Oct. 5, 1961, 75 Stat. 833; Pub. L. 91–469, § 35(a), Oct. 21, 1970, 84 Stat. 1035; Pub. L. 97–31, § 12(91), Aug. 6, 1981, 95 Stat. 161. 57305(b) ...... 46 App.:1160(d) (3d, last sentences). In subsection (a), the words ‘‘fair value’’ are sub- stituted for ‘‘fair and reasonable value’’ to eliminate unnecessary words. In paragraph (3), the word ‘‘com- merce’’ is substituted for ‘‘trade’’ for consistency in the chapter. In subsection (b), the words ‘‘for the entire period of such use’’ are omitted as unnecessary. § 57306. Payment of trade-in allowance (a) ACQUISITION AT TIME OF CONTRACT.—If ac- quisition of an obsolete vessel under this chap- ter occurs when the owner contracts for the con- struction or purchase of the new vessel, the Sec- retary of Transportation shall apply the trade- in allowance to the purchase price of the new vessel rather than paying it to the owner. If the new vessel is constructed under this subtitle, the Secretary may apply the trade-in allowance to the required cash payments on terms and con- ditions the Secretary may prescribe. If the new vessel is not constructed under this subtitle, the Secretary shall pay the trade-in allowance to the builder of the vessel for the account of the owner when the Secretary acquires the obsolete vessel. (b) ACQUISITION AT TIME OF DELIVERY.—If ac- quisition of the obsolete vessel occurs when the new vessel is delivered to the owner, the Sec- retary shall deposit the trade-in allowance in the owner’s capital construction fund. (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1663.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 57306 .......... 46 App.:1160(b) (4th–7th sen- tences). June 29, 1936, ch. 858, title V, § 510(b) (4th–7th sen- tences), as added Aug. 4, 1939, ch. 417, § 7, 53 Stat. 1184; Pub. L. 87–401, subdiv. (1), Oct. 5, 1961, 75 Stat. 833; Pub. L. 91–469, §§ 12(b), 35(a), Oct. 21, 1970, 84 Stat. 1022, 1035; Pub. L. 97–31, § 12(91), Aug. 6, 1981, 95 Stat. 161. In subsection (b), the words ‘‘acquisition of the obso- lete vessel occurs’’ are substituted for ‘‘title to the ob- solete vessel is acquired’’ for consistency in the chap- ter. § 57307. Recognition of gain for tax purposes The owner of an obsolete vessel does not rec- ognize a gain under the Federal income tax laws when the vessel is transferred to the Secretary of Transportation in exchange for a trade-in al- lowance under this chapter. The basis of the new vessel acquired with the allowance is the same as the basis of the obsolete vessel— Page 517 TITLE 46—SHIPPING § 57502 (1) increased by the difference between the cost of the new vessel and the trade-in allow- ance of the obsolete vessel; and (2) decreased by the amount of loss recog- nized on the transfer. (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1663.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 57307 .......... 46 App.:1160(e). June 29, 1936, ch. 858, title V, § 510(e), as added Aug. 4, 1939, ch. 417, § 7, 53 Stat. 1184; Pub. L. 97–31, § 12(91), Aug. 6, 1981, 95 Stat. 161. The words ‘‘for gain or loss upon a sale or exchange and for depreciation under the applicable Federal in- come-tax laws’’ and ‘‘or vessels exchanged for credit upon the acquisition of such new vessel’’ are omitted as unnecessary. In paragraph (1), the words ‘‘the dif- ference between the cost of the new vessel and the trade-in allowance of the obsolete vessel’’ are sub- stituted for ‘‘the amount of the cost of such vessel (other than the cost represented by such obsolete vessel or vessels)’’ for clarity. § 57308. Use of vessels at least 25 years old An obsolete vessel acquired under this chapter that is or becomes at least 25 years old may not be used for commercial operation. However, the vessel may be used— (1) during a period in which vessels may be requisitioned under chapter 563 of this title; or (2) except as otherwise provided in this sub- title, on trade routes serving only the foreign trade of the United States. (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1664.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 57308 .......... 46 App.:1160(g). June 29, 1936, ch. 858, title V, § 510(g), as added Aug. 4, 1939, ch. 417, § 7, 53 Stat. 1185; Pub. L. 86–518, § 1, June 12, 1960, 74 Stat. 216; Pub. L. 97–31, § 12(91), Aug. 6, 1981, 95 Stat. 161. The words ‘‘and vessels presently in the Secretary’s laid-up fleet which are or become twenty-five years old or more’’ and ‘‘or any such vessel in the laid-up fleet’’ are omitted as obsolete. In paragraph (2), the words ‘‘for the employment of the Secretary’s vessels in steamship lines’’ are omitted as unnecessary. CHAPTER 575—CONSTRUCTION, CHARTER, AND SALE OF VESSELS SUBCHAPTER I—GENERAL Sec. 57501. Completion of long-range program. 57502. Construction, reconditioning, and remodeling of vessels. 57503. Competitive bidding. 57504. Charter or sale of vessels acquired by Depart- ment of Transportation. 57505. Employment of vessels on foreign trade routes. 57506. Minimum selling price of vessels. SUBCHAPTER II—CHARTERS 57511. Demise charters. 57512. Competitive bidding. 57513. Minimum bid. 57514. Qualifications of bidders. Sec. 57515. Awarding of charters. 57516. Operating-differential subsidies. 57517. Recovery of excess profits. 57518. Performance bond. 57519. Insurance. 57520. Vessel maintenance. 57521. Termination of charter during national emer- gency. 57522. Books and records, balance sheets, and in- spection and auditing. SUBCHAPTER III—MISCELLANEOUS 57531. Construction and charter of vessels for unsuc- cessful routes. 57532. Operation of experimental vessels. 57533. Vessel chartering authority. Editorial Notes AMENDMENTS 2018—Pub. L. 115–232, div. C, title XXXV, § 3546(t), Aug. 13, 2018, 132 Stat. 2327, inserted period at end of item 57533. 2016—Pub. L. 114–120, title III, § 313(c)(2), Feb. 8, 2016, 130 Stat. 59, added item 57522. 2008—Pub. L. 110–181, div. C, title XXXV, § 3511(b), Jan. 28, 2008, 122 Stat. 594, added item 57533. SUBCHAPTER I—GENERAL § 57501. Completion of long-range program Whenever the Secretary of Transportation de- termines that the objectives and policies de- clared in sections 50101 and 50102 of this title cannot be fully realized within a reasonable time under title V of the Merchant Marine Act, 1936, and the President approves the determina- tion, the Secretary, in accordance with this chapter, shall complete the long-range program described in section 50102 of this title. (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1664; Pub. L. 114–120, title III, § 313(b)(1), Feb. 8, 2016, 130 Stat. 58.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 57501 .......... 46 App.:1191. June 29, 1936, ch. 858, title VII, § 701, 49 Stat. 2008; Pub. L. 97–31, § 12(103), Aug. 6, 1981, 95 Stat. 162. The words ‘‘find and’’, ‘‘finding and’’, ‘‘in whole or in part’’, and ‘‘previously adopted’’ are omitted as unnec- essary. The word ‘‘shall’’ is substituted for ‘‘is author- ized and directed to’’ to eliminate unnecessary words. Editorial Notes REFERENCES IN TEXT The Merchant Marine Act, 1936, referred to in text, is act June 29, 1936, ch. 858, 49 Stat. 1985. Title V of the Act enacted provisions set out as a note under section 53101 of this title. For complete classification of this Act to the Code, see Short Title of 1936 Amendment note set out under section 101 of this title and Tables. AMENDMENTS 2016—Pub. L. 114–120 substituted ‘‘title V’’ for ‘‘titles V and VI’’. § 57502. Construction, reconditioning, and re- modeling of vessels (a) IN GENERAL.—The Secretary of Transpor- tation may have new vessels constructed, and