I 111th CONGRESS 1st Session H. R. 3370 IN THE HOUSE OF REPRESENTATIVES July 29, 2009 Mr. Davis of Alabama (for himself and Mr. Boustany) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Transportation and Infrastructure, 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 permit qualified withdrawals from a capital construction fund account for the maintenance or repair of United States-flag vessels provided that the maintenance or repair is performed within the United States.

1.

Short title

This Act may be cited as the Vessel Repair Enhancement Act of 2009.

2.

Expansion of Vessel Capital Construction Fund

(a)

Amendments to title 46

(1)

Qualified vessel

Paragraph (5) of section 53501(5) of title 46, United States Code, is amended by striking and at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting a semicolon, and by adding at the end the following new subparagraphs: (C)a vessel— (i)documented under the laws of the United States; and (ii)maintained or repaired in a privately owned shipyard located in the United States; and (D)any floating drydock and related shipyard infrastructure (including marine railways)— (i)located in the United States; and (ii)used to build, maintain, or repair vessels documented under the laws of the United States. . (2)

Allowable purpose for fund

Subsection (b) of section 53503 of title 46, United States Code, is amended by inserting before the period at the end the following: or to provide maintenance or repair of vessels documented under the laws of the United States. (3)

Qualified withdrawals

Subsection (a) of section 53509 of title 46, United States Code, is amended by striking and is for— and all that follows through the period at the end and inserting the following: and is for—(1)in the case of a qualified vessel described in subparagraph (A), (B), or (D) of section 53501(5)— (A)the acquisition, construction, or reconstruction of such a qualified vessel or a barge or container that is part of the complement of such a qualified vessel; or (B)the payment of the principal on indebtedness incurred in the acquisition, construction, or reconstruction of such a qualified vessel or container that is part of the complement of such a qualified vessel; or (2)in the case of a qualified vessel described in subparagraph (C) of section 53501(5), maintenance or repairs of such a qualified vessel. . (4)

Tax treatment of qualified withdrawals

(A)

Ordering withdrawals

Subsection (a) of section 53510 of title 46, United States Code, is amended— (i)by redesignating paragraphs (1), (2), and (3) as subparagraphs (A), (B), and (C), respectively, and by moving such subparagraphs (as so redesignated) 2 ems to the right, (ii)by striking (a) Order of withdrawals.—A qualified withdrawal and inserting the following: (a)

Order of withdrawals

(1)

In general

Except as provided in paragraph (2), a qualified withdrawal , and (iii)by adding at the end the following new paragraph: (2)

Special rule for certain maintenance and repair withdrawals

A qualified withdrawal described in section 53509(a)(2) shall be treated as made— (A)first from the ordinary income account; (B)second from the capital gain account; and (C)third from the capital account. . (B)

Basis reductions

Section 53510 of title 46, United States Code, is amended by adding at the end the following new subsection: (f)

No basis reduction for certain qualified withdrawals

Subsections (b) and (c) shall not apply to qualified withdrawals described in section 53509(a)(2). . (b)

Amendments to Internal Revenue Code of 1986

(1)

Qualified withdrawals

Paragraph (1) of section 7518(e) of the Internal Revenue Code of 1986 (relating to purposes of qualified withdrawals) is amended by striking but only if it is for: and all that follows through the period at the end of subparagraph (C) and inserting the following: but only if it is for:(A)in the case of a qualified vessel described in subparagraph (A), (B), or (D) of section 53501(5) of title 46, United States Code— (i)the acquisition, construction, or reconstruction of such a qualified vessel or a barge or container that is part of the complement of such a qualified vessel; or (ii)the payment of the principal on indebtedness incurred in the acquisition, construction, or reconstruction of such a qualified vessel or container that is part of the complement of such a qualified vessel; or (B)in the case of a qualified vessel described in subparagraph (C) of section 53501(5) of title 46, United States Code, maintenance or repairs of such a qualified vessel. . (2)

Tax treatment of qualified withdrawals

(A)

Ordering withdrawals

(i)Paragraph (1) of section 7518(f) of such Code is amended by redesignating subparagraphs (A), (B), and (C) as clauses (i), (ii), and (iii), respectively, and moving such clauses, as so redesignated, 2 ems to the right, (ii)by striking (1) Ordering rule.—Any qualified withdrawal and inserting the following: (1)

Ordering rule

(A)

In general

Except as provided in subparagraph (B), any qualified withdrawal , and (iii)by adding at the end the following new subparagraph: (B)

Special rule for certain maintenance and repair withdrawals

A qualified withdrawal described in subsection (e)(1)(B) shall be treated as made— (i)first from the ordinary income account; (ii)second from the capital gain account; and (iii)third from the capital account. . (3)

Basis reductions

Subsection (f) of section 7518 of such Code is amended by adding at the end the following new paragraph: (6)

No basis reduction for certain qualified withdrawals

Paragraphs (2) and (3) shall not apply to qualified withdrawals described in subsection (e)(1)(B). . (4)

Technical amendment

Subsection (i) of section 7518 of such Code is amended— (A)by striking section 607(k) each place it appears and inserting section 53501, (B)by striking of the Merchant Marine Act, 1936 and inserting of title 46, United States Code,, and (C)by striking as in effect on the date of the enactment of this section and inserting as in effect on the date of the enactment of the Vessel Repair Enhancement Act of 2009. (c)

Effective date

The amendments made by this section shall take effect on the date of the enactment of this Act.