United States-Flag Merchant Marine Revitalization Act of 1999

Summary: United States-Flag Merchant Marine Revitalization Act of 1999 - Amends the Merchant Marine Act, 1936 to add to the list of vessels for which a capital construction fund may be established vessels that are for operation in oceangoing domestic trade between two coastal points in the United States or in support of operations conducted on the Outer Continental Shelf. 
Redefines "eligible vessel" to eliminate references to being constructed or reconstructed in the United States.  Revises the definition of "qualified vessel" to: (1) add references to such trade and operations; and (2) mandate an agreement with the Secretary of Commerce.  (Current law mandates an agreement with the Secretary of Commerce regarding fisheries vessels and with the Secretary of Transportation regarding all other vessels.) Removes the definition of "noncontiguous trade." 
Removes references to containers from provisions requiring that, in order for a withdrawal for a barge or container to be a qualified withdrawal (and except to the extent provided in regulations), the barge or container must have been constructed in the United States.  Adds containers and trailers that are part of an eligible vessel's complement to the definition of "vessel." 
Defines "foreign commerce" and "foreign trade." 
Adds as qualified withdrawals from such funds payments that reduce the principal amount of a qualified lease of a qualified vessel or container that is part of an eligible vessel's complement.  Adds references to payments to reduce the principal amount of any qualified lease to provisions regulating the tax treatment of qualified withdrawals.  Defines "qualified lease" as any lease with a term of at least five years. 
Adds the amount elected for deposit under specified provisions of the Tariff Act of 1930 to the list of amounts, the sum of which is the limit on deposits to a fund in any taxable year.  Includes that amount in the capital account.  Allows deposits in excess of the limit if a change in taxable income for a prior taxable year is such that a deposit could have been made for that prior year. 
Modifies: (1) the contents of the capital gain and ordinary income accounts; (2) the tax treatment of nonqualified withdrawals from the capital gain account; (3) requirements regarding the tax rate on nonqualified withdrawals; and (4) requirements regarding unqualified withdrawal interest payable under specified provisions of the Internal Revenue Code. 
Allows amounts in such funds to be invested in income-producing assets (including accounts receivable) approved by the Secretaries of Commerce (for fishing vessels) or Transportation (for all other vessels). 
Amends the Internal Revenue Code to deem withdrawals qualified if they are for payments that reduce the principal of a qualified lease of a qualified vessel or container that is part of an eligible vessel's complement.  Allows, if a qualified withdrawal is made from the ordinary income or capital gain accounts and used to reduce such principal, a reduction in the basis of vessels, barges, and containers owned by the person maintaining the fund. 
Adds the amount elected for deposit under specified provisions of the Tariff Act of 1930 to the list of amounts, the sum of which is the limit on deposits to a fund in any taxable year. 
Modifies the contents of the capital account. 
Allows deposits in excess of the limit if a change in taxable income for a prior taxable year is such that a deposit could have been made for that prior year. 
Modifies: (1) the contents of the capital gain and ordinary income accounts; (2) the tax treatment of nonqualified withdrawals from the capital gain account; (3) requirements regarding the tax rate on nonqualified withdrawals; and (4) requirements regarding unqualified withdrawal interest payable under specified provisions of the Code. 
Allows amounts in such funds to be invested in income-producing assets (including accounts receivable) approved by the Secretaries of Commerce (for fishing vessels) or Transportation (for all other vessels). 
Modifies requirements regarding qualified withdrawals and containers that are part of the complement of a qualified vessel. 
Links definitions in related provisions of the Merchant Marine Act, 1936 to definitions in related provisions of the Internal Revenue Code. 
Removes provisions relating to marine capital construction funds from provisions regarding the determination of the alternative minimum taxable income of a corporation. 
Amends the Tariff Act of 1930 to allow the owner or master of a vessel, documented under U.S. laws to engage in foreign or coasting trade, that has purchased equipment or repairs in a foreign country to deposit the ad valorem duty on the value of the equipment or repairs in a capital construction fund rather than paying them to the Secretary of the Treasury.

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.