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 fol-
lowing 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 re-
pair is performed within the United States. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Vessel Repair En-
hancement Act of 2009’’. 
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SEC. 2. EXPANSION OF VESSEL CAPITAL CONSTRUCTION 
FUND. 
(a) AMENDMENTS TO TITLE 46.— 
(1) QUALIFIED VESSEL.—Paragraph (5) of sec-
tion 53501(5) of title 46, United States Code, is 
amended by striking ‘‘and’’ at the end of subpara-
graph (A), by striking the period at the end of sub-
paragraph (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 pri-
vately owned shipyard located in the 
United States; and 
‘‘(D) any floating drydock and related 
shipyard infrastructure (including marine rail-
ways)— 
‘‘(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.—Sub-
section (b) of section 53503 of title 46, United 
States Code, is amended by inserting before the pe-
riod at the end the following: ‘‘or to provide mainte-
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(A) 
ORDERING
WITHDRAWALS.—Sub-
section (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 WITH-
DRAWALS.—A qualified withdrawal’’ and 
inserting the following: 
‘‘(a) ORDER OF WITHDRAWALS.— 
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), a qualified withdrawal’’, and 
(iii) by adding at the end the fol-
lowing new paragraph: 
‘‘(2) SPECIAL
RULE
FOR
CERTAIN
MAINTE-
NANCE
AND
REPAIR
WITHDRAWALS.—A qualified 
withdrawal described in section 53509(a)(2) shall be 
treated as made— 
‘‘(A) first from the ordinary income ac-
count; 
‘‘(B) second from the capital gain account; 
and 
‘‘(C) third from the capital account.’’. 
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(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 sub-
paragraph (C) and inserting the following: ‘‘but only 
if it is for: 
‘‘(A) in the case of a qualified vessel de-
scribed in subparagraph (A), (B), or (D) of sec-
tion 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, 
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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 de-
scribed 
in 
subparagraph 
(C) 
of 
section 
53501(5) of title 46, United States Code, main-
tenance or repairs of such a qualified vessel.’’. 
(2) TAX
TREATMENT
OF
QUALIFIED
WITH-
DRAWALS.— 
(A) ORDERING WITHDRAWALS.—(i) Para-
graph (1) of section 7518(f) of such Code is 
amended by redesignating subparagraphs (A), 
(B), and (C) as clauses (i), (ii), and (iii), re-
spectively, and moving such clauses, as so re-
designated, 2 ems to the right, 
(ii) by striking ‘‘(1) ORDERING RULE.— 
Any qualified withdrawal’’ and inserting the fol-
lowing: 
‘‘(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: 
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‘‘(B) SPECIAL RULE FOR CERTAIN MAIN-
TENANCE
AND
REPAIR
WITHDRAWALS.—A 
qualified withdrawal described in subsection 
(e)(1)(B) shall be treated as made— 
‘‘(i) first from the ordinary income ac-
count; 
‘‘(ii) second from the capital gain ac-
count; and 
‘‘(iii) third from the capital account.’’. 
(3) BASIS REDUCTIONS.—Subsection (f) of sec-
tion 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 
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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. 
Æ 
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