II 

111TH CONGRESS 

1ST SESSION S. 1656 

To amend the Internal Revenue Code of 1986 to provide for the treatment 

of S corporations for purposes of election of the alternative tax on 

qualifying shipping activities, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 9, 2009 

Ms. STABENOW (for herself, Mr. VOINOVICH, Mr. LEVIN, and Ms. 

KLOBUCHAR) introduced the following bill; which was read twice and referred to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for the treatment of S corporations for purposes of election of the alternative tax on qualifying shipping activities, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. TREATMENT OF S CORPORATIONS FOR PUR4 POSES OF ELECTION OF THE ALTERNATIVE 

5 TAX ON QUALIFYING SHIPPING ACTIVITIES. 

6 (a) IN GENERAL.—Section 1352 of the Internal Rev7 enue Code of 1986 is amended to read as follows: 


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•S 1656 IS

1 ‘‘SEC. 1352. ALTERNATIVE TAX ON QUALIFYING SHIPPING 

2 ACTIVITIES. 

3 ‘‘(a) IN GENERAL.—In the case of an electing cor4 poration other than an S corporation, the tax imposed by 

5 section 11 shall be the amount equal to the sum of— 

6 ‘‘(1) the tax imposed by section 11 determined 

7 after the application of this subchapter, and 

8 ‘‘(2) a tax equal to— 

9 ‘‘(A) the highest rate of tax specified in 

10 section 11, multiplied by 

11 ‘‘(B) the notional shipping income for the 

12 taxable year. 

13 ‘‘(b) S CORPORATIONS.—In the case of an electing 

14 corporation which is an S corporation, the notional ship15 ping income of such S corporation shall be taken into ac16 count under section 1366 by a shareholder of such S cor17 poration in lieu of the income excluded under section 

18 1357.’’. 

19 (b) SURTAX IMPOSED ON TONNAGE TAX DIFFEREN20 TIAL AMOUNT.—Subsection (f) of section 1366 of the In21 ternal Revenue Code of 1986 is amended by adding at the 

22 end the following new paragraph: 

23 ‘‘(4) SURTAX ON TONNAGE TAX DIFFERENTIAL

24 AMOUNT.—In the case of a shareholder of an S cor25 poration which is an electing corporation for pur26 poses of subchapter R of this chapter, the tax deterVerDate Nov 24 2008 00:33 Sep 10, 2009 Jkt 079200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S1656.IS S1656

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•S 1656 IS

1 mined under this chapter (other than this para2 graph) with respect to such shareholder for any tax3 able year in which the shareholder takes into ac4 count notional shipping income shall be increased by 

5 an amount equal to 15 percent of the excess, if any, 

6 of— 

7 ‘‘(A) the shareholder’s pro rata share of 

8 the amount which would be included in gross 

9 income of the corporation but for the applica10 tion of section 1357, over 

11 ‘‘(B) the shareholder’s pro rata share of 

12 the notional shipping income (as defined in sec13 tion 1353) of the corporation.’’. 

14 (c) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to taxable years beginning after 

16 the date of the enactment of this Act. 

Æ 


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