[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2159 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                H. R. 2159

To amend the Merchant Marine Act, 1936 and the Internal Revenue Code of 
  1986 to revitalize the international competitiveness of the United 
                      States-flag merchant marine.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 10, 1999

     Mr. McCrery (for himself, Mr. Herger, Mr. Jefferson, and Mr. 
 Abercrombie) introduced the following bill; which was referred to the 
   Committee on Ways and Means, and in addition to the Committees on 
Transportation and Infrastructure, and Armed Services, for a period to 
      be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
To amend the Merchant Marine Act, 1936 and the Internal Revenue Code of 
  1986 to revitalize the international competitiveness of the United 
                      States-flag merchant marine.

    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-Flag Merchant Marine 
Revitalization Act of 1999''.

SEC. 2. AMENDMENTS OF MERCHANT MARINE ACT, 1936.

    (a) Changes in Vessels to Which Capital Construction Funds Apply.--
            (1) The second sentence of subsection (a) of section 607 of 
        the Merchant Marine Act, 1936 is amended by striking ``for 
        operation in the United States foreign, Great Lakes, or 
        noncontiguous domestic trade or in the fisheries of the United 
        States'' and inserting ``for operation in the fisheries of the 
        United States, or in the United States foreign, Great Lakes, 
        noncontiguous domestic trade, or other oceangoing domestic 
        trade between two coastal points in the United States or in 
        support of operations conducted on the Outer Continental 
        Shelf''.
            (2) Paragraph (1) of section 607(k) of such Act (defining 
        eligible vessel) is amended to read as follows:
            ``(1) The term `eligible vessel' means any vessel--
                    ``(A) documented under the laws of the United 
                States, and
                    ``(B) operated in the foreign or domestic commerce 
                of the United States or in the fisheries of the United 
                States.''.
            (3) Paragraph (2)(C) of section 607(k) of such Act is 
        amended to read as follows:
                    ``(C) which the person maintaining the fund agrees 
                with the Secretary of Commerce will be operated in the 
                fisheries of the United States, or in the United States 
                foreign, Great Lakes, noncontiguous domestic trade, or 
                other oceangoing domestic trade between two coastal 
                points in the United States or in support of operations 
                conducted on the Outer Continental Shelf.''.
            (4) Section 607(k) of such Act is amended by striking 
        paragraph (8) and redesignating paragraph (9) as paragraph (8).
            (5) The last sentence of paragraph (1) of section 607(f) of 
        such Act is amended by striking ``and containers'' each place 
        it appears.
            (6) Paragraph (7) of section 607(k) of such Act is amended 
        by inserting ``containers or trailers intended for use as part 
        of the complement of one or more eligible vessels and'' before 
        ``cargo handling''.
            (7) Subsection (k) of section 607 of such Act (as amended 
        by paragraph (4)) is amended by adding at the end the following 
        new paragraph:
            ``(9) The terms `foreign commerce' and `foreign trade' have 
        the meanings given such terms in section 905, except that these 
        terms shall include commerce or trade between foreign ports.''.
    (b) 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 (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 amounts which reduce the 
                principal amount (as determined under regulations 
                promulgated by the Secretary) of a qualified lease of a 
                qualified vessel or container which is part of the 
                complement of an eligible 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'' after ``indebtedness''.
            (3) Subsection (k) of section 607 of such Act is amended by 
        adding after paragraph (10) the following new paragraph:
            ``(11) The term `qualified lease' means any lease with a 
        term of at least 5 years.''.
    (c) Authority To Make Deposits Under the Tariff Act of 1930.--
            (1) Paragraph (1) of section 607(b) 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 the following new subparagraph:
                    ``(E) the amount elected for deposit under 
                subsection (i) of section 466 of the Tariff Act of 1930 
                (19 U.S.C 1466).''.
            (2) Subparagraph (A) of section 607(e)(2) of such Act is 
        amended to read as follows:
                    ``(A) amounts referred to in subsections (b)(1)(B) 
                and (E),''.
    (d) Authority To Make Deposits for Prior Years Based on Audit 
Adjustments.--Subsection (b) of section 607 of such Act is amended by 
adding at the end thereof the following new paragraph:
            ``(4) To the extent permitted by joint regulations, 
        deposits may be made in excess of the limitation described in 
        paragraph (1) (and any limitation specified in the agreement) 
        for the taxable year if, by reason of a change in taxable 
        income for a prior taxable year that has become final pursuant 
        to a closing agreement or other similar agreement entered into 
        during the taxable year, the amount of the deposit could have 
        been made for such prior taxable year.''.
    (e) Treatment of Capital Gains and Losses.--
            (1) Paragraph (3) of section 607(e) of such Act is amended 
        to read as follows:
            ``(3) The capital gain account shall consist of--
                    ``(A) amounts representing long-term capital gains 
                (as defined in section 1222 of such Code) on assets 
                held in the fund, reduced by
                    ``(B) amounts representing long-term capital losses 
                (as defined in such section) on assets held in the 
                fund.''.
            (2) Subparagraph (B) of section 607(e)(4) of such Act is 
        amended to read as follows:
                    ``(B)(i) amounts representing short-term capital 
                gains (as defined in section 1222 of such Code) on 
                assets held in the fund, reduced by
                    ``(ii) amounts representing short-term capital 
                losses (as defined in such section) on assets held in 
                the fund,''.
            (3) Subparagraph (B) of section 607(h)(3) of such Act is 
        amended by striking ``gain'' and all that follows and inserting 
        ``long-term capital gain (as defined in section 1222 of such 
        Code), and''.
            (4) The last sentence of subparagraph (A) of section 
        607(h)(6) of such Act is amended by striking ``20 percent (34 
        percent in the case of a corporation)'' and inserting ``the 
        rate applicable to net capital gain under section 1(h)(1)(C) or 
        1201(a) of such Code, as the case may be''.
    (f) Computation of Interest With Respect to Nonqualified 
Withdrawal.--
            (1) Subparagraph (C) of section 607(h)(3) of such Act is 
        amended--
                    (A) by striking clause (i) and inserting the 
                following new clause:
                            ``(i) no addition to the tax shall be 
                        payable under section 6651 of such Code, and'', 
                        and
                    (B) by striking ``paid at the applicable rate (as 
                defined in paragraph (4))'' in clause (ii) and 
                inserting ``paid in accordance with section 6601 of 
                such Code''.
            (2) Subsection (h) of section 607 of such Act is amended by 
        striking paragraph (4) and by redesignating paragraphs (5) and 
        (6) as paragraphs (4) and (5), respectively.
            (3) Subparagraph (A) of section 607(h)(5) of such Act, as 
        redesignated by paragraph (2), is amended by striking 
        ``paragraph (5)'' and inserting ``paragraph (4)''.
    (g) Other Changes.--
            (1) Section 607 of such Act is amended by striking ``the 
        Internal Revenue Code of 1954'' each place it appears and 
        inserting ``the Internal Revenue Code of 1986''.
            (2) Subsection (c) of section 607 of such Act is amended by 
        striking ``interest-bearing securities approved by the 
        Secretary'' and inserting ``interest-bearing securities and 
        other income-producing assets (including accounts receivable) 
        approved by the Secretary''.

SEC. 3. AMENDMENTS OF INTERNAL REVENUE CODE OF 1986.

    (a) Treatment of Certain Lease Payments.--
            (1) Paragraph (1) of section 7518(e) of the Internal 
        Revenue Code of 1986 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 payments of amounts which reduce the 
                principal amount (as determined under regulations) of a 
                qualified lease of a qualified vessel or container 
                which is part of the complement of an eligible 
                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'' after ``indebtedness''.
    (b) Authority To Make Deposits Under the Tariff Act of 1930.--
            (1) Paragraph (1) of section 7518(a) 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 the following new 
        subparagraph:
                    ``(E) the amount elected for deposit under 
                subsection (i) of section 466 of the Tariff Act of 1930 
                (19 U.S.C 1466).''.
            (2) Subparagraph (A) of section 7518(d)(2) of such Code is 
        amended to read as follows:
                    ``(A) amounts referred to in subsections (a)(1)(B) 
                and (E).''.
    (c) Authority To Make Deposits for Prior Years Based on Audit 
Adjustments.--Subsection (a) of section 7518 of such Code is amended by 
adding at the end thereof the following new paragraph:
            ``(4) To the extent permitted by joint regulations, 
        deposits may be made in excess of the limitation described in 
        paragraph (1) (and any limitation specified in the agreement) 
        for the taxable year if, by reason of a change in taxable 
        income for a prior taxable year that has become final pursuant 
        to a closing agreement or other similar agreement entered into 
        during the taxable year, the amount of the deposit could have 
        been made for such prior taxable year.''.
    (d) Treatment of Capital Gains and Losses.--
            (1) Paragraph (3) of section 7518(d) of such Code is 
        amended to read as follows:
            ``(3) Capital gain account.--The capital gain account shall 
        consist of--
                    ``(A) amounts representing long-term capital gains 
                (as defined in section 1222) on assets held in the 
                fund, reduced by
                    ``(B) amounts representing long-term capital losses 
                (as defined in such section) on assets held in the 
                fund.
            (2) Subparagraph (B) of section 7518(d)(4) of such Code is 
        amended to read as follows:
                    ``(B)(i) amounts representing short-term capital 
                gains (as defined in section 1222) on assets held in 
                the fund, reduced by
                    ``(ii) amounts representing short-term capital 
                losses (as defined in such section) on assets held in 
                the fund,''.
            (3) Subparagraph (B) of section 7518(g)(3) of such Code is 
        amended by striking ``gain'' and all that follows and inserting 
        ``long-term capital gain (as defined in section 1222), and''.
            (4) The last sentence of subparagraph (A) of section 
        7518(g)(6) of such Code is amended by striking ``20 percent (34 
        percent in the case of a corporation)'' and inserting ``the 
        rate applicable to net capital gain under such section 
        1(h)(1)(C) or 1201(a), as the case may be''.
    (e) Computation of Interest With Respect to Nonqualified 
Withdrawals.--
            (1) Subparagraph (C) of section 7518(g)(3) of such Code is 
        amended--
                    (A) by striking clause (i) and inserting the 
                following new clause:
                            ``(i) no addition to the tax shall be 
                        payable under section 6651, and'', and
                    (B) by striking ``paid at the applicable rate (as 
                defined in paragraph (4))'' in clause (ii) and 
                inserting ``paid in accordance with section 6601''.
            (2) Subsection (g) of section 7518 of such Code is amended 
        by striking paragraph (4) and by redesignating paragraphs (5) 
        and (6) as paragraphs (4) and (5), respectively.
            (3) Subparagraph (A) of section 7518(g)(5) of such Code, as 
        redesignated by paragraph (2), is amended by striking 
        ``paragraph (5)'' and inserting ``paragraph (4)''.
    (f) Other Changes.--
            (1) Paragraph (2) of section 7518(b) of such Code is 
        amended by striking ``interest-bearing securities approved by 
        the Secretary'' and inserting ``interest-bearing securities and 
        other income-producing assets (including accounts receivable) 
        approved by the Secretary''.
            (2) Paragraph (1) of section 7518(e) of such Code is 
        amended by striking ``and containers'' each place it appears.
            (3) Subsection (i) of section 7518 of such Code is amended 
        by striking ``this section'' and inserting ``the United States-
        Flag Merchant Marine Revitalization Act of 1999''.
            (4) 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),''.
            (5) Subsection (c) of section 56 of such Code is amended by 
        striking paragraph (2) and by redesignating paragraph (3) as 
        paragraph (2).

 SEC. 4. AMENDMENT TO THE TARIFF ACT OF 1930.

    Section 466 of the Tariff Act of 1930 (19 U.S.C. 1466) is amended 
by adding at the end the following new subsection:
    ``(i) Election To Deposit Duty Into a Capital Construction Fund in 
Lieu of Payment to the Secretary of the Treasury.--At the election of 
the owner or master of any vessel referred to in subsection (a) of this 
section which is an eligible vessel (as defined in section 607(k) of 
the Merchant Marine Act, 1936), the portion of any duty imposed by 
subsection (a) which is deposited in a fund established under section 
607 of such Act shall be treated as paid to the Secretary of the 
Treasury in satisfaction of the liability for such duty.''.

SEC. 5. EFFECTIVE DATE.

    (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) Changes in Computation of Interest.--The amendments made by 
sections 2(f) and 3(e) shall apply to withdrawals made after December 
31, 1998, including for purposes of computing interest on such a 
withdrawal for periods on or before such date.
    (c) Qualified Leases.--The amendments made by sections 2(b) and 
3(a) shall apply to leases in effect on, or entered into after, 
December 31, 1998.
    (d) Amendment to the Tariff Act of 1930.--The amendment made by 
section 4 shall apply with respect to entries not yet liquidated by 
December 31, 1998, and to entries made on or after such date.
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