I 

111TH CONGRESS 

1ST SESSION H. R. 3370 

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. 

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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Vessel Repair En5 hancement Act of 2009’’. 


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1 SEC. 2. EXPANSION OF VESSEL CAPITAL CONSTRUCTION 

2 FUND. 

3 (a) AMENDMENTS TO TITLE 46.— 

4 (1) QUALIFIED VESSEL.—Paragraph (5) of sec5 tion 53501(5) of title 46, United States Code, is 

6 amended by striking ‘‘and’’ at the end of subpara7 graph (A), by striking the period at the end of sub8 paragraph (B) and inserting a semicolon, and by 

9 adding at the end the following new subparagraphs: 

10 ‘‘(C) a vessel— 

11 ‘‘(i) documented under the laws of the 

12 United States; and 

13 ‘‘(ii) maintained or repaired in a pri14 vately owned shipyard located in the 

15 United States; and 

16 ‘‘(D) any floating drydock and related 

17 shipyard infrastructure (including marine rail18 ways)— 

19 ‘‘(i) located in the United States; and 

20 ‘‘(ii) used to build, maintain, or repair 

21 vessels documented under the laws of the 

22 United States.’’. 

23 (2) ALLOWABLE PURPOSE FOR FUND.—Sub24 section (b) of section 53503 of title 46, United 

25 States Code, is amended by inserting before the pe26 riod at the end the following: ‘‘or to provide mainteVerDate Nov 24 2008 00:03 Jul 31, 2009 Jkt 079200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3370.IH H3370

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1 nance or repair of vessels documented under the 

2 laws of the United States’’. 

3 (3) QUALIFIED WITHDRAWALS.—Subsection (a) 

4 of section 53509 of title 46, United States Code, is 

5 amended by striking ‘‘and is for—’’ and all that fol6 lows through the period at the end and inserting the 

7 following: ‘‘and is for— 

8 ‘‘(1) in the case of a qualified vessel described 

9 in subparagraph (A), (B), or (D) of section 

10 53501(5)— 

11 ‘‘(A) the acquisition, construction, or re12 construction of such a qualified vessel or a 

13 barge or container that is part of the com14 plement of such a qualified vessel; or 

15 ‘‘(B) the payment of the principal on in16 debtedness incurred in the acquisition, con17 struction, or reconstruction of such a qualified 

18 vessel or container that is part of the com19 plement of such a qualified vessel; or 

20 ‘‘(2) in the case of a qualified vessel described 

21 in subparagraph (C) of section 53501(5), mainte22 nance or repairs of such a qualified vessel.’’. 

23 (4) TAX TREATMENT OF QUALIFIED WITH24 DRAWALS.— 


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1 (A) ORDERING WITHDRAWALS.—Sub2 section (a) of section 53510 of title 46, United 

3 States Code, is amended— 

4 (i) by redesignating paragraphs (1), 

5 (2), and (3) as subparagraphs (A), (B), 

6 and (C), respectively, and by moving such 

7 subparagraphs (as so redesignated) 2 ems 

8 to the right, 

9 (ii) by striking ‘‘(a) ORDER OF WITH10 DRAWALS.—A qualified withdrawal’’ and 

11 inserting the following: 

12 ‘‘(a) ORDER OF WITHDRAWALS.— 

13 ‘‘(1) IN GENERAL.—Except as provided in para14 graph (2), a qualified withdrawal’’, and 

15 (iii) by adding at the end the fol16 lowing new paragraph: 

17 ‘‘(2) SPECIAL RULE FOR CERTAIN MAINTE18 NANCE AND REPAIR WITHDRAWALS.—A qualified 

19 withdrawal described in section 53509(a)(2) shall be 

20 treated as made— 

21 ‘‘(A) first from the ordinary income ac22 count; 

23 ‘‘(B) second from the capital gain account; 

24 and 

25 ‘‘(C) third from the capital account.’’. 


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1 (B) BASIS REDUCTIONS.—Section 53510 

2 of title 46, United States Code, is amended by 

3 adding at the end the following new subsection: 

4 ‘‘(f) NO BASIS REDUCTION FOR CERTAIN QUALIFIED

5 WITHDRAWALS.—Subsections (b) and (c) shall not apply 

6 to qualified withdrawals described in section 

7 53509(a)(2).’’. 

8 (b) AMENDMENTS TO INTERNAL REVENUE CODE OF

9 1986.— 

10 (1) QUALIFIED WITHDRAWALS.—Paragraph (1) 

11 of section 7518(e) of the Internal Revenue Code of 

12 1986 (relating to purposes of qualified withdrawals) 

13 is amended by striking ‘‘but only if it is for:’’ and 

14 all that follows through the period at the end of sub15 paragraph (C) and inserting the following: ‘‘but only 

16 if it is for: 

17 ‘‘(A) in the case of a qualified vessel de18 scribed in subparagraph (A), (B), or (D) of sec19 tion 53501(5) of title 46, United States Code— 

20 ‘‘(i) the acquisition, construction, or 

21 reconstruction of such a qualified vessel or 

22 a barge or container that is part of the 

23 complement of such a qualified vessel; or 

24 ‘‘(ii) the payment of the principal on 

25 indebtedness incurred in the acquisition, 


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1 construction, or reconstruction of such a 

2 qualified vessel or container that is part of 

3 the complement of such a qualified vessel; 

4 or 

5 ‘‘(B) in the case of a qualified vessel de6 scribed in subparagraph (C) of section 

7 53501(5) of title 46, United States Code, main8 tenance or repairs of such a qualified vessel.’’. 

9 (2) TAX TREATMENT OF QUALIFIED WITH10 DRAWALS.— 

11 (A) ORDERING WITHDRAWALS.—(i) Para12 graph (1) of section 7518(f) of such Code is 

13 amended by redesignating subparagraphs (A), 

14 (B), and (C) as clauses (i), (ii), and (iii), re15 spectively, and moving such clauses, as so re16 designated, 2 ems to the right, 

17 (ii) by striking ‘‘(1) ORDERING RULE.— 

18 Any qualified withdrawal’’ and inserting the fol19 lowing: 

20 ‘‘(1) ORDERING RULE.— 

21 ‘‘(A) IN GENERAL.—Except as provided in 

22 subparagraph (B), any qualified withdrawal’’, 

23 and 

24 (iii) by adding at the end the following new 

25 subparagraph: 


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1 ‘‘(B) SPECIAL RULE FOR CERTAIN MAIN2 TENANCE AND REPAIR WITHDRAWALS.—A 

3 qualified withdrawal described in subsection 

4 (e)(1)(B) shall be treated as made— 

5 ‘‘(i) first from the ordinary income ac6 count; 

7 ‘‘(ii) second from the capital gain ac8 count; and 

9 ‘‘(iii) third from the capital account.’’. 

10 (3) BASIS REDUCTIONS.—Subsection (f) of sec11 tion 7518 of such Code is amended by adding at the 

12 end the following new paragraph: 

13 ‘‘(6) NO BASIS REDUCTION FOR CERTAIN

14 QUALIFIED WITHDRAWALS.—Paragraphs (2) and (3) 

15 shall not apply to qualified withdrawals described in 

16 subsection (e)(1)(B).’’. 

17 (4) TECHNICAL AMENDMENT.—Subsection (i) 

18 of section 7518 of such Code is amended— 

19 (A) by striking ‘‘section 607(k)’’ each place 

20 it appears and inserting ‘‘section 53501’’, 

21 (B) by striking ‘‘of the Merchant Marine 

22 Act, 1936’’ and inserting ‘‘of title 46, United 

23 States Code,’’, and 

24 (C) by striking ‘‘as in effect on the date of 

25 the enactment of this section’’ and inserting ‘‘as 


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1 in effect on the date of the enactment of the 

2 Vessel Repair Enhancement Act of 2009.’’ 

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

4 this section shall take effect on the date of the enactment 

5 of this Act. 

Æ 


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