46 U.S.C. § 53308 — Order and proportions of deposits and

Page 417 TITLE 46—SHIPPING § 53310 § 53308. Order and proportions of deposits and withdrawals In this chapter— (1) if the net proceeds of a sale or the net in- demnity for a loss is deposited in more than one deposit, the amount consisting of the gain shall be deemed to be deposited first; (2) amounts expended, obligated, or other- wise withdrawn shall be applied against the amounts deposited in the fund in the order of deposit; and (3) if a deposit consists in part of a gain not recognized under section 53306 of this title, any expenditure, obligation, or withdrawal ap- plied against that deposit shall be deemed to be a gain in the proportion that the part of the deposit consisting of a gain bears to the total amount of the deposit. (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1589.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 53308 .......... 46 App.:1161(e). June 29, 1936, ch. 858, title V, § 511(e), as added Oct. 10, 1940, ch. 849, 54 Stat. 1107. § 53309. Accumulation of deposits For any taxable year, amounts on deposit in a construction reserve fund on the last day of the taxable year, for which the requirements of sec- tion 53310 of this title have been satisfied (to the extent they apply on the last day of the taxable year), are deemed to have been retained for the reasonable needs of the business within the meaning of section 537(a) of the Internal Rev- enue Code of 1986 (26 U.S.C. 537(a)). (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1589.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 53309 .......... 46 App.:1161(f). June 29, 1936, ch. 858, title V, § 511(f), as added Oct. 10, 1940, ch. 849, 54 Stat. 1107. The words ‘‘are deemed to have been retained for the reasonable needs of the business within the meaning of section 537(a) of the Internal Revenue Code of 1986 (26 U.S.C. 537(a))’’ are substituted for ‘‘shall not constitute an accumulation of earnings or profits within the meaning of section 102 of the Internal Revenue Code’’ because section 102 of the Internal Revenue Code of 1939 has been superseded by part 1 of subchapter G of chap- ter 1 of the Internal Revenue Code of 1986 (26 U.S.C. 531 et seq.). See also 46 C.F.R. § 287.16 (2003). § 53310. Obligation of deposits and period for construction of certain vessels (a) APPLICATION OF SECTIONS 53306 AND 53309.— Sections 53306 and 53309 of this title apply to a deposit in a construction reserve fund only if, within 3 years after the date of the deposit (and any extension under subsection (c))— (1)(A) a contract is made for the construc- tion or acquisition of a new vessel or, with the approval of the Secretary of Transportation, for a part interest in a new vessel or for the re- construction or reconditioning of a new vessel; (B) the deposit is expended or obligated for expenditure under that contract; (C) at least 12.5 percent of the construction or contract price of the vessel is paid or irrev- ocably committed for payment; and (D) the plans and specifications for the ves- sel are approved by the Secretary to the ex- tent the Secretary considers necessary; or (2) the deposit is expended or obligated for expenditure for the liquidation of existing or subsequently incurred purchase-money indebt- edness to a person not a parent company of, or a company affiliated or associated with, the mortgagor on a new vessel. (b) ADDITIONAL REQUIREMENTS FOR CERTAIN VESSELS.—In addition to the requirements of subsection (a)(1), for a vessel not constructed under a construction-differential subsidy con- tract or not bought from the Secretary of Trans- portation— (1) at least 5 percent of the construction (or, if the contract covers more than one vessel, at least 5 percent of the construction of the first vessel) must be completed within 6 months after the date of the construction contract (or within the period of an extension under sub- section (c)), as estimated by the Secretary and certified by the Secretary to the Secretary of the Treasury; and (2) construction under the contract must be completed with reasonable dispatch there- after. (c) EXTENSIONS.—The Secretary of Transpor- tation may grant extensions of the period within which the deposits must be expended or obli- gated or within which the construction must have progressed to the extent of 5 percent com- pletion under this section. However, the exten- sions may not be for a total of more than 2 years for the expenditure or obligation of deposits or one year for the progress of construction. (Pub. L. 109–304, § 8(c), Oct. 6, 2006, 120 Stat. 1589.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 53310(a) ...... 46 App.:1161(g) (less (1)(B)). June 29, 1936, ch. 858, title V, § 511(g), (h), as added Oct. 10, 1940, ch. 849, 54 Stat. 1107; June 17, 1943, ch. 130, subdivs. (c), (d), 57 Stat. 158; July 17, 1952, ch. 939, §§ 12, 13(a), 66 Stat. 763; Pub. L. 86–237, § 1, Sept. 8, 1959, 73 Stat. 471; Pub. L. 87–303, § 3, Sept. 26, 1961, 75 Stat. 661; Pub. L. 87–782, § 1, Oct. 10, 1962, 76 Stat. 796; Pub. L. 88–227, § 1, Dec. 23, 1963, 77 Stat. 470; Pub. L. 88–595, § 1, Sept. 12, 1964, 78 Stat. 943; Pub. L. 97–31, § 12(92), Aug. 6, 1981, 95 Stat. 161. 53310(b) ...... 46 App.:1161(g)(1)(B). 53310(c) ...... 46 App.:1161(h). In this section, the language about joint regulations in 46 App. U.S.C. 1161(g) and (h) is omitted as unneces- sary because of section 53302(b) of the revised title. In subsection (a), the words ‘‘(i) two years from the date of deposit or the date of any extension thereof which may be granted by the Secretary of Transpor- tation pursuant to the provisions of subsection (h) of this section, in the case of deposits made prior to the date on which these amendatory provisions become ef- fective, or’’ in 46 App. U.S.C. 1161(g)(1) and (2) are omit-