[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3822 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 3822

 To amend the Merchant Marine Act, 1936, and the Internal Revenue Code 
 of 1986 to promote construction and operation of passenger vessels in 
               the United States, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            February 9, 1994

  Mrs. Unsoeld (for herself, Mr. Studds, Mr. Lipinski, Mr. Dicks, Ms. 
 Cantwell, Ms. Dunn, Mr. Kriedler, Mr. Swift, Mr. Manton, Mr. Borski, 
Mr. Hoyer, Mr. Cunningham, and Mr. Johnson of South Dakota) introduced 
  the following bill; which was referred jointly to the Committees on 
            Merchant Marine and Fisheries and Ways and Means

_______________________________________________________________________

                                 A BILL


 
 To amend the Merchant Marine Act, 1936, and the Internal Revenue Code 
 of 1986 to promote construction and operation of passenger vessels in 
               the United States, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``United States Passenger Vessel 
Development Tax Act''.

SEC. 2. PURPOSE.

    The purpose of this Act is to provide measures to encourage 
investment in new passenger vessels documented under the laws of the 
United States.

SEC. 3. CHANGES TO CAPITAL CONSTRUCTION FUND.

    (a) Expanding the CCF Program to Passenger Vessels in Domestic 
Trades.--
            (1) Paragraph (2) of section 607(k) of the Merchant Marine 
        Act, 1936 (46 App. U.S.C. 1177) is amended by adding at the end 
        thereof the following new flush sentence:
        ``In the case of a passenger vessel, subparagraph (C) (and the 
        second sentence of subsection (a)) shall be treated as 
        including a reference to all domestic trades.''
            (2) Paragraph (1) of section 607(k) of such Act (defining 
        eligible vessel) is amended by adding at the end the following: 
        ``For purposes of subparagraph (B), documentation under section 
        12113 of title 46, United States Code (as added by H.R. 3821 of 
        the 103d Congress), shall be treated as documentation under the 
        laws of the United States.''
    (b) Treatment of Fund Earnings.--
            (1) Section 607 of such Act is amended by adding at the end 
        thereof the following new subsection:
    ``(n) Taxation of Earnings on Investments In Certain Funds.--
            ``(1) In general.--In the case of a capital construction 
        fund to which this subsection applies, the tax imposed by 
        chapter 1 of the Internal Revenue Code of 1986 shall be 
        determined--
                    ``(A) by excluding from gross income the taxable 
                earnings from the investment and reinvestment of 
                amounts held in such capital construction fund, and
                    ``(B) by increasing the tax imposed by such chapter 
                by the product of the amount of such taxable earnings 
                and the highest rate of tax specified in section 1 
                (section 11 in the case of a corporation) of such Code.
            ``(2) Maximum rate on capital gains.--If there is a net 
        capital gain on amounts held in a capital construction fund to 
        which this subsection applies, the rate of tax taken into 
        account under paragraph (1)(B) with respect to such gain shall 
        not exceed the rate applicable to net capital gain under 
        section 1(h) or 1201(a) of such Code, as the case may be.
            ``(3) Funds to which subsection applies.--This subsection 
        shall apply to any capital construction fund into which amounts 
        are deposited by reason of the operation of a passenger vessel.
            ``(4) Coordination with deduction for net operating 
        losses.--Any earnings excluded from gross income under 
        paragraph (1) shall be excluded in determining taxable income 
        under section 172(b)(2) of such Code.
            ``(5) Taxable earnings.--For purposes of this section, the 
        term `taxable earnings' means net earnings determined with the 
        following modifications:
                    ``(A) There shall be excluded interest income 
                exempt from taxation under section 103 of such Code.
                    ``(B) If the person maintaining the fund is a 
                corporation, there shall be excluded the percentage 
                applicable under section 243(a)(1) of such Code of any 
                dividend received by the fund with respect to which 
                such person would (but for paragraph (1)(A)) be allowed 
                a deduction under section 243 of such Code.
                    ``(C) Losses from the sale or exchange of capital 
                assets shall be allowed only to the extent of gains 
                from such sales or exchanges.
                    ``(D) There shall be excluded--
                            ``(i) earnings on amounts deposited in the 
                        fund which are attributable to vessels 
                        documented under the laws of the United States 
                        for operation in the fisheries of the United 
                        States, and
                            ``(ii) earnings on earnings described in 
                        clause (i).''
            (2) Subparagraph (D) of section 607(b)(1) of such Act is 
        amended by inserting ``reduced by the tax (if any) imposed on 
        such receipts under subsection (n)'' after ``in such fund''.
            (3) Subparagraph (C) of section 607(d)(1) of such Act is 
        amended by inserting ``except as provided in subsection (n),'' 
        before ``the earnings''.
            (4) Paragraph (2) of section 607(e) of such Act is amended 
        by striking ``and'' at the end of subparagraph (C), by striking 
        the period at the end of subparagraph (D) and inserting ``, 
        and'', and by adding at the end thereof the following new 
        subparagraph:
                    ``(E) in the case of any capital construction fund 
                to which subsection (n) applies, the taxable earnings 
                (as defined in such subsection) of such fund.''
            (5) Paragraph (3) of section 607(e) of such Act is amended 
        by adding at the end thereof the following new flush sentence:
        ``In the case of any capital construction fund to which 
        subsection (n) applies, the taxable earnings (as defined in 
        such subsection) of such fund shall not be taken into account 
        under this paragraph.''
            (6) Paragraph (4) of section 607(e) of such Act is amended 
        by adding at the end thereof the following new flush sentence:
        ``In the case of any capital construction fund to which 
        subsection (n) applies, the taxable earnings (as defined in 
        such subsection) of such fund shall not be taken into account 
        under subparagraph (B), and subparagraphs (C) and (E) shall not 
        apply.''
            (7) Paragraph (1) of section 607(f) of such Act is amended 
        by striking ``or'' at the end of subparagraph (B), by striking 
        the period at the end of subparagraph (C) and inserting ``, 
        or'', and by inserting after subparagraph (C) the following new 
        subparagraph:
                    ``(D) the payment of the tax (if any) imposed by 
                subsection (n).''
    (c) Treatment of Certain Lease Payments.--
            (1) Paragraph (1) of section 607(f) of such Act is amended 
        by striking ``or'' at the end of subparagraph (C), by striking 
        the period at the end of subparagraph (D) and inserting ``, 
        or'', and by inserting after subparagraph (D) the following new 
        subparagraph:
                    ``(E) the payment of amounts which reduce the 
                principal amount (as determined under regulations) of a 
                qualified lease of a passenger vessel which is a 
                qualified vessel.''
            (2) Paragraph (4) of section 607(g) of such Act is amended 
        by inserting ``(or to reduce the principal amount of any 
        qualified lease a passenger vessel which is a qualified 
        vessel)'' after ``indebtedness''.
            (3) Subsection (k) of section 607 of such Act is amended by 
        adding at the end thereof the following new paragraph:
            ``(10) The term `qualified lease' means any lease with a 
        term of at least 5 years.''
    (d) Computation of Interest With Respect to Nonqualified 
Withdrawals.--Paragraph (3) of section 607(h) of such Act is amended by 
adding at the end the following flush sentence:
        ``In the case of a withdrawal from a fund to which subsection 
        (n) applies, in lieu of applying subparagraph (C), no addition 
        to the tax shall be payable under section 6651 of such Code and 
        interest on the amount of the additional tax attributable to 
        any item referred to in subparagraph (A) or (B) shall be paid 
        in accordance with section 6601 of such Code.''
    (e) Passenger Vessel Design and Engineering Costs May Be Paid From 
Funds.--Paragraph (1) of section 607(f) of such Act is further amended 
by striking ``or'' at the end of subparagraph (D), by striking the 
period at the end of subparagraph (E) and inserting ``, or'', and by 
inserting after subparagraph (E) the following new subparagraph:
                    ``(F) the design and engineering of any 
                construction or reconstruction of a qualified vessel 
                which is a passenger vessel.''
    (f) Expansion of Permitted Investments By Passenger Vessel Funds.--
Subsection (c) of section 607 of such Act is amended by inserting 
``(and, in the case of a fund to which subsection (n) applies, other 
income-producing assets (including accounts receivable)'' after 
``interest-bearing securities''.
    (g) Withdrawals Permitted for Certain Prior Expenditures.--
Paragraph (1) of section 607(f) of such Act is further amended by 
striking ``or'' at the end of subparagraph (E), by striking the period 
at the end of subparagraph (F) and inserting ``, or'', and by inserting 
after subparagraph (F) the following new subparagraph:
                    ``(G) the reimbursement of the person maintaining 
                the fund for amounts expended by such person in the 
                reconstruction of any vessel for which an interim 
                certificate of documentation was issued under section 
                12113 of title 46, United States Code (as added by H.R. 
                3821 of the 103d Congress).''
    (h) Amounts in Capital Construction Fund By Reason of Interim 
Certificate Vessel Required To Be Committed To Construction of New 
Qualified Vessel.--Section 607 of the Merchant Marine Act, 1936, is 
amended by adding at the end the following new subsection:
    ``(o) Tax on Interim Certificate Vessel Deposits in Fund Which Are 
Not Committed To New Construction, Etc.--
            ``(1) Tax imposed if contract for construction of qualified 
        vessel not entered into within 3 years.--If any person deposits 
        any amount into a capital construction fund by reason of the 
        treatment provided by the last sentence of subsection (k)(1), 
        and such person fails to enter into a qualified contract within 
        the period of 3 years after the date the certificate referred 
        to in such sentence was issued--
                    ``(A) such fund shall, at the close of such period, 
                cease to be treated as a capital construction fund and 
                shall be treated as distributing all amounts in such 
                fund to such person, and
                    ``(B) such person's tax imposed by chapter 1 of the 
                Internal Revenue Code of 1986 for the taxable year in 
                which such period ends shall be determined--
                            ``(i) by excluding from gross income the 
                        amount treated as distributed under 
                        subparagraph (A), and
                            ``(ii) by increasing the tax imposed by 
                        such chapter by the product of such amount and 
                        the highest rate of tax specified in section 1 
                        (section 11 in the case of a corporation) of 
                        such Code.
            ``(2) Tax on withdrawals not used in furtherance of 
        construction contract.--If there is a withdrawal from a fund 
        referred to in paragraph (1) which is not in furtherance of 
        entering into a qualified contract within such 3 year period, 
        such withdrawal shall not be taxed as otherwise provided in 
        this section and such person's tax imposed by chapter 1 of such 
        Code for the taxable year in which such withdrawal is made 
        shall be determined--
                    ``(A) by excluding such withdrawal from gross 
                income, and
                    ``(B) by increasing the tax imposed by such chapter 
                by the product of the amount of such withdrawal and the 
                highest rate of tax specified in section 1 (section 11 
                in the case of a corporation) of such Code.
            ``(3) Qualified contract.--For purposes of this subsection, 
        the term `qualified contract' means any contract for the 
        construction of a new qualified vessel the consideration for 
        which will be paid from the capital construction fund referred 
        to in paragraph (1).
            ``(4) Coordination with deduction for net operating 
        losses.--Any amount excluded from gross income under this 
        subsection shall be excluded in determining taxable income 
        under section 172(b)(2) of such Code.''

SEC. 4. AMENDMENTS OF INTERNAL REVENUE CODE OF 1986.

    (a) Treatment of Fund Earnings.--
            (1) Section 7518 of the Internal Revenue Code of 1986 is 
        amended by redesignating subsections (h) and (i) as subsections 
        (j) and (k), respectively, and by inserting after subsection 
        (g) the following new subsection:
    ``(h) Taxation of Earnings on Investment in Certain Funds.--
            ``(1) In general.--In the case of a capital construction 
        fund to which this subsection applies, the tax imposed by 
        chapter 1 shall be determined--
                    ``(A) by excluding from gross income the earnings 
                from the investment and reinvestment of amounts held in 
                such capital construction fund, and
                    ``(B) by increasing the tax imposed by such chapter 
                by the product of the amount of such earnings and the 
                highest rate of tax specified in section 1 (section 11 
                in the case of a corporation).
            ``(2) Maximum rate on capital gains.--If there is a net 
        capital gain on amounts held in a capital construction fund to 
        which this subsection applies, the rate of tax taken into 
        account under paragraph (1)(B) with respect to such gain shall 
        not exceed the rate applicable to net capital gain under 
        section 1(h) or 1201(a), as the case may be.
            ``(3) Funds to which subsection applies.--This subsection 
        shall apply to any capital construction fund into which amounts 
        are deposited by reason of the operation of a passenger vessel.
            ``(4) Coordination with deduction for net operating 
        losses.--Any earnings excluded from gross income under 
        paragraph (1) shall be excluded in determining taxable income 
        under section 172(b)(2).
            ``(5) Taxable earnings.--For purposes of this section, the 
        term `taxable earnings' means net earnings determined with the 
        following modifications:
                    ``(A) There shall be excluded interest income 
                exempt from taxation under section 103.
                    ``(B) If the person maintaining the fund is a 
                corporation, there shall be excluded the percentage 
                applicable under section 243(a)(1) of any dividend 
                received by the fund with respect to which such person 
                would (but for paragraph (1)(A)) be allowed a deduction 
                under section 243.
                    ``(C) Losses from the sale or exchange of capital 
                assets shall be allowed only to the extent of gains 
                from such sales or exchanges.
                    ``(D) There shall be excluded--
                            ``(i) earnings on amounts deposited in the 
                        fund which are attributable to vessels 
                        documented under the laws of the United States 
                        for operation in the fisheries of the United 
                        States, and
                            ``(ii) earnings on earnings described in 
                        clause (i).''
            (2) Subparagraph (D) of section 7518(a)(1) of such Code is 
        amended by inserting ``reduced by the tax (if any) imposed on 
        such receipts under subsection (h)'' after ``in such fund''.
            (3) Subparagraph (C) of section 7518(c)(1) of such Code is 
        amended by inserting ``except as provided in subsection (h),'' 
        before ``the earnings''.
            (4) Paragraph (2) of section 7518(d) of such Code is 
        amended by striking ``and'' at the end of subparagraph (C), by 
        striking the period at the end of subparagraph (D) and 
        inserting ``, and'', and by adding at the end thereof the 
        following new subparagraph:
                    ``(E) in the case of any capital construction fund 
                to which subsection (h) applies, the taxable earnings 
                (as defined in such subsection) of such fund.''
            (5) Paragraph (3) of section 7518(d) of such Code is 
        amended by adding at the end thereof the following new flush 
        sentence:
        ``In the case of any capital construction fund to which 
        subsection (h) applies, the taxable earnings (as defined in 
        such subsection) of such fund shall not be taken into account 
        under this paragraph.''
            (6) Paragraph (4) of section 7518(d) of such Code is 
        amended by adding at the end thereof the following new flush 
        sentence:
        ``In the case of any capital construction fund to which 
        subsection (h) applies, the taxable earnings (as defined in 
        such subsection) of such fund shall not be taken into account 
        under subparagraph (B), and subparagraphs (C) and (E) shall not 
        apply.''
            (7) Paragraph (1) of section 7518(g) of such Code is 
        amended by striking ``subsection (h)'' and inserting 
        ``subsection (i)''.
            (8) Paragraph (1) of section 7518(e) of such Code is 
        amended by striking ``or'' at the end of subparagraph (B), by 
        striking the period at the end of subparagraph (C) and 
        inserting ``, or'', and by inserting after subparagraph (C) the 
        following new subparagraph:
                    ``(D) the payment of the tax (if any) imposed by 
                subsection (h).''
    (b) Treatment of Certain Lease Payments.--
            (1) Paragraph (1) of section 7518(e) of such Code is 
        amended by striking ``or'' at the end of subparagraph (C), by 
        striking the period at the end of subparagraph (D) and 
        inserting ``, or'', and by inserting after subparagraph (D) the 
        following new subparagraph:
                    ``(E) the payment of amounts which reduce the 
                principal amount (as determined under regulations) of a 
                qualified lease of a passenger vessel which is a 
                qualified vessel.''
            (2) Paragraph (4) of section 7518(f) of such Code is 
        amended by inserting ``(or to reduce the principal amount of 
        any qualified lease of a passenger vessel which is a qualified 
        vessel)'' after ``indebtedness''.
    (c) Computation of Interest With Respect to Nonqualified 
Withdrawals.--Paragraph (3) of section 7518(g) of such Code is amended 
by adding at the end the following flush sentence:
        ``In the case of a withdrawal from a fund to which subsection 
        (n) applies, in lieu of applying subparagraph (C), no addition 
        to the tax shall be payable under section 6651 and interest on 
        the amount of the additional tax attributable to any item 
        referred to in subparagraph (A) or (B) shall be paid in 
        accordance with section 6601.''
    (d) Passenger Vessel Design and Engineering Costs May Be Paid From 
Funds.--Paragraph (1) of section 7518(e) of such Code is further 
amended by striking ``or'' at the end of subparagraph (D), by striking 
the period at the end of subparagraph (E) and inserting ``, or'', and 
by inserting after subparagraph (E) the following new subparagraph:
                    ``(F) the design and engineering of any 
                construction or reconstruction of a qualified vessel 
                which is a passenger vessel.''
    (e) Expansion of Permitted Investments By Passenger Vessel Funds.--
Paragraph (2) of section 7518(b) of such Code is amended by inserting 
``(and, in the case of a fund to which subsection (n) applies, other 
income-producing assets (including accounts receivable)'' after 
``interest-bearing securities''.
    (f) Withdrawals Permitted for Certain Prior Expenditures.--
Paragraph (1) of section 7518(e) of such Code is further amended by 
striking ``or'' at the end of subparagraph (E), by striking the period 
at the end of subparagraph (F) and inserting ``, or'', and by inserting 
after subparagraph (F) the following new subparagraph:
                    ``(G) the reimbursement of the person maintaining 
                the fund for amounts expended by such person in the 
                reconstruction of any vessel for which an interim 
                certificate of documentation was issued under section 
                12113 of title 46, United States Code (as added by H.R. 
                3821 of the 103d Congress).''
    (g) Amounts in Capital Construction Fund By Reason of Interim 
Certificate Vessel Required To Be Committed To Construction of New 
Qualified Vessel.--Section 7518 of such Code is amended by inserting 
after subsection (h) the following new subsection:
    ``(i) Tax on Interim Certificate Vessel Deposits in Fund Which Are 
Not Committed To New Construction, Etc.--
            ``(1) Tax imposed if contract for construction of qualified 
        vessel not entered into within 3 years.--If any person deposits 
        any amount into a capital construction fund by reason of the 
        treatment provided by the last sentence of section 607(k)(1) of 
        the Merchant Marine Act, 1936, and such person fails to enter 
        into a qualified contract within the period of 3 years after 
        the date the certificate referred to in such sentence was 
        issued--
                    ``(A) such fund shall, at the close of such period, 
                cease to be treated as a capital construction fund and 
                shall be treated as distributing all amounts in such 
                fund to such person, and
                    ``(B) such person's tax imposed by chapter 1 for 
                the taxable year in which such period ends shall be 
                determined--
                            ``(i) by excluding from gross income the 
                        amount treated as distributed under 
                        subparagraph (A), and
                            ``(ii) by increasing the tax imposed by 
                        chapter 1 by the product of such amount and the 
                        highest rate of tax specified in section 1 
                        (section 11 in the case of a corporation).
            ``(2) Tax on withdrawals not used in furtherance of 
        construction contract.--If there is a withdrawal from a fund 
        referred to in paragraph (1) which is not in furtherance of 
        entering into a qualified contract within such 3 year period, 
        such withdrawal shall not be taxed as otherwise provided in 
        this section and such person's tax imposed by chapter 1 for the 
        taxable year in which such withdrawal is made shall be 
        determined--
                    ``(A) by excluding such withdrawal from gross 
                income, and
                    ``(B) by increasing the tax imposed by chapter 1 by 
                the product of the amount of such withdrawal and the 
                highest rate of tax specified in section 1 (section 11 
                in the case of a corporation).
            ``(3) Qualified contract.--For purposes of this subsection, 
        the term `qualified contract' means any contract for the 
        construction of a new qualified vessel the consideration for 
        which will be paid from the capital construction fund referred 
        to in paragraph (1).
            ``(4) Coordination with deduction for net operating 
        losses.--Any amount excluded from gross income under this 
        subsection shall be excluded in determining taxable income 
        under section 172(b)(2).''
    (h) Other Changes.--
            (1) Subsection (j) of section 7518 of such Code is amended 
        by striking ``this section.'' and inserting ``the United States 
        Passenger Vessel Development Tax Act.''
            (2) Subparagraph (B) of section 543(a)(1) of such Code is 
        amended to read as follows:
            ``(B) interest on amounts set aside in a capital 
        construction fund under section 607 of the Merchant Marine Act, 
        1936 (46 App. U.S.C. 1177), or in a construction reserve fund 
        under section 511 of such Act (46 App. U.S.C. 1161),''.
            (3) Subsection (c) of section 56 is amended by striking 
        paragraph (2) and by redesignating paragraph (3) as paragraph 
        (2).

SEC. 5. 3-YEAR RECOVERY PERIOD FOR UNITED STATES FLAG PASSENGER 
              VESSELS.

    (a) In General.--Subparagraph (A) of section 168(e)(3) of the 
Internal Revenue Code of 1986 is amended by striking ``and'' at the end 
of clause (i), by striking the period at the end of clause (ii) and 
inserting ``, and'', and by adding at the end thereof the following:
                            ``(iii) any eligible vessel (as defined in 
                        section 607(k)(1) of the Merchant Marine Act, 
                        1936) which is a passenger vessel, but only if 
                        the original use of such vessel and containers 
                        commences with the taxpayer.''
    (b) Minimum Tax Treatment.--
            (1) Subparagraph (B) of section 56(a)(1) of such Code is 
        amended by inserting before the period ``or in paragraph 
        (3)(A)(iii) of section 168(e)''.
            (2) Clause (v) of section 56(g)(4)(A) of such Code is 
        amended by inserting ``or in paragraph (3)(A)(iii) of section 
        168(e)'' after ``section 168(f)''.

SEC. 6. MODIFICATION OF LIMITATIONS ON DEDUCTIONS FOR ATTENDANCE AT 
              CONVENTIONS, ETC. ON CRUISE SHIPS.

    (a) Only Home Port of Cruise Ship Must Be In United States or 
Possessions.--Subparagraph (B) of section 274(h)(2) of the Internal 
Revenue Code of 1986 (relating to conventions on cruise ships) is 
amended to read as follows:
                    ``(B) the home port of such cruise ship is located 
                in the United States or a possession of the United 
                States.''
    (b) Repeal of $2,000 Limitation.--Paragraph (2) of section 274(h) 
of such Code is amended by striking the last sentence.
    (c) Only 1 Reporting Requirement.--Subparagraph (A) of section 
274(h)(5) of such Code is amended by striking ``and'' at the end and 
inserting ``or''.
    (d) Interim Documentation Treated as Registration.--Paragraph (2) 
of section 274(h) of such Code is amended by adding at the end thereof 
the following flush sentence:
        ``For purposes of subparagraph (A), documentation under section 
        12113 of title 46, United States Code (as added by H.R. 3821 of 
        the 103d Congress), shall be treated as registration in the 
        United States.''

SEC. 7. EMPLOYER INCENTIVES FOR TRAVEL AWARDS.

    (a) Credit for Certain Travel Awards.--
            (1) In general.--Subpart B of part IV of subchapter A of 
        chapter 1 of the Internal Revenue Code of 1986 is amended by 
        adding at the end thereof the following new section:

``SEC. 30A. EMPLOYEE AWARDS FOR TRAVEL ON DOMESTIC CRUISE SHIPS.

    ``(a) General Rule.--In the case of an employer, there shall be 
allowed as a credit against the tax imposed by this section an amount 
equal to 10 percent of the amount paid or incurred by the taxpayer as a 
qualified travel award for an employee of the taxpayer.
    ``(b) Maximum Credit.--The credit allowed by subsection (a) for 
awards made to an employee during the taxable year shall not exceed 
$200.
    ``(c) Qualified Travel Award.--For purposes of this section, the 
term `qualified travel award' means any award in recognition of an 
achievement by an employee for travel on any cruise ship--
            ``(1) which is registered in the United States, and
            ``(2) the home port of which is located in the United 
        States or a possession of the United States.
For purposes of paragraph (1), documentation under section 12113 of 
title 46, United States Code (as added by H.R. 3821 of the 103d 
Congress), shall be treated as registration in the United States.''
    ``(d) Application With Other Credits.--The credit allowed by 
subsection (a) for any taxable year shall not exceed the excess (if 
any) of--
            ``(1) the regular tax for the taxable year reduced by the 
        sum of the credits allowable under subpart A and sections 27, 
        28, 29, and 30, over
            ``(2) the tentative minimum tax for the taxable year.''
            (2) Clerical amendment.--The table of sections for such 
        subpart B is amended by adding at the end thereof the following 
        new item:

                              ``Sec. 30A. Employee awards for travel on 
                                        domestic cruise ships.''
    (b) Reduction of Deduction for Travel on Foreign Cruise Ships.--
Subsection (m) of section 274 of such Code (relating to additional 
limitations on travel expenses) is amended by adding at the end the 
following new paragraph:
            ``(3) Foreign cruise ships.--
                    ``(A) In general.--The amount allowable as a 
                deduction under this chapter for expenses incurred for 
                transportation on any foreign cruise ship shall not 
                exceed 90 percent of the amount of such expenses which 
                would (but for this paragraph) be allowable as a 
                deduction under this chapter.
                    ``(B) Foreign cruise ship.--For purposes of 
                subparagraph (A), the term `foreign cruise ship' means 
                any cruise ship which does not meet the requirements of 
                subparagraphs (A) and (B) of section 274(h)(2).''

SEC. 8. EFFECTIVE DATES.

    (a) In General.--Except as otherwise provided in this section, the 
amendments made by this Act shall apply to taxable years beginning 
after the date of the enactment of this Act.
    (b) Definition of Qualified Vessel.--The amendments made by section 
3(a) shall apply for purposes of determining whether any withdrawal 
made after December 31, 1992, is a qualified withdrawal (within the 
meaning of section 607(f) of the Merchant Marine Act, 1936, as in 
effect after such amendments).
    (c) Taxation of Earnings.--The amendments made by sections 3(b) and 
4(a) shall apply to earnings after December 31, 1992, in taxable years 
ending after such date.
    (d) Changes in Computation of Interest.--The amendments made by 
sections 3(d) and 4(c) shall apply to withdrawals made after December 
31, 1992.
    (e) Qualified Leases.--The amendments made by sections 3(c) and 
4(b) shall apply to leases in effect on, or entered into after, 
December 31, 1992.
    (f) Depreciation.--The amendments made by section 5 shall apply to 
property placed in service after December 31, 1992, in taxable years 
ending after such date.
    (g) Effective Date.--The amendments made by section 6 shall apply 
to cruises beginning after the date of the enactment of this Act.

                                 <all>

HR 3822 IH----2