PUBLIC LAW 99-514—OCT. 22, 1986
100 STAT. 2215
(1) Subparagraph (A) of section 607(d)(1) of the Merchant Marine Act, 1936 is amended by inserting "and section 7518 of such Code" after "this section". (2) Subparagraph (D) of section 607(d)(1) of such Act is amended by inserting "and section 7518 of such Code" after "this section". (3) Subparagraph (C) of section 607(e)(2) of such Act is amended by striking out "85 percent" and inserting in lieu thereof "the percentage applicable under section 243(a)(1) of the Internal Revenue Code of 1986". (4) Subparagraph (E) of section 607(e)(4) of such Act is amended to read as follows: "(E) the portion of any dividend referred to in paragraph (2)(C) not taken into account under such paragraph." (5) Paragraph (3) of section 607(g) of such Act is amended to read as follows: "(3) If any portion of a qualified withdrawal for a vessel, barge, or container is made out of the capital gain account, the basis of such vessel, barge, or container shall be reduced by an amount equal to such portion." (6) Subsection (h) of section 607 of such Act is amended by adding at the end thereof the following new paragraphs: "(5) AMOUNT NOT WITHDRAWN FROM FUND AFTER 25 YEARS FROM DEPOSIT TAXED AS NONQUALIFIED WITHDRAWAL.—
"(A) IN GENERAL.—The applicable percentage of any amount which remains in a capital construction fund at the close of the 26th, 27th, 28th, 29th, or 30th taxable year following the taxable year for which such amount was deposited shall be treated as a nonqualified withdrawal in accordance with the following table: "If the amount remains in the fund at the close of the— 2()th taxable year 27th taxable year 2Sth taxable year 29th taxable year
- ?()th taxable year
The applicable percentage is— 20 percent 40 percent (jO percent 80 percent 100 percent.
"(B) EARNINGS TREATED AS DEPOSITS.—The earnings of any
capital construction fund for any taxable year (other than net gains) shall be treated for purposes of this paragraph as an amount deposited for such taxable year. "(C) AMOUNTS COMMITTED TREATED AS WITHDRAWN.—For
purposes of subparagraph (A), an amount shall not be treated as remaining in a capital construction fund at the close of any taxable year to the extent there is a binding contract at the close of such year for a qualified withdrawal of such amount with respect to an identified item for which such withdrawal may be made. "(D) AUTHORITY TO TREAT EXCESS FUNDS AS WITHDRAWN.—
If the Secretary determines that the balance in any capital construction fund exceeds the amount which is appropriate to meet the vessel construction program objectives of the person who established such fund, the amount of such excess shall be treated as a nonqualified withdrawal under subparagraph (A) unless such person develops appropriate program objectives within 3 years to dissipate such excess.
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