I 
112TH CONGRESS 
1ST SESSION H. R. 1267 
To amend the Internal Revenue Code of 1986 to modify the application 
of the tonnage tax on certain vessels. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 30, 2011 
Mr. HERGER (for himself, Mr. BLUMENAUER, Mr. GERLACH, and Ms. 
HIRONO) introduced the following bill; which was referred to the Com-
mittee on Ways and Means 
A BILL 
To amend the Internal Revenue Code of 1986 to modify 
the application of the tonnage tax on certain vessels. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. MODIFICATION OF THE APPLICATION OF THE 
TONNAGE TAX ON VESSELS OPERATING IN 
THE DUAL UNITED STATES DOMESTIC AND 
FOREIGN TRADES. 
(a) IN GENERAL.—Subsection (f) of section 1355 of 
the Internal Revenue Code of 1986 (relating to definitions 
and special rules) is amended to read as follows: 
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‘‘(f) EFFECT OF OPERATING A QUALIFYING VESSEL 
IN THE DUAL UNITED STATES DOMESTIC AND FOREIGN 
TRADES.—For purposes of this subchapter— 
‘‘(1) an electing corporation shall be treated as 
continuing to use a qualifying vessel in the United 
States foreign trade during any period of use in the 
United States domestic trade, and 
‘‘(2) gross income from such United States do-
mestic trade shall not be excluded under section 
1357(a), but shall not be taken into account for pur-
poses of section 1353(b)(1)(B) or for purposes of 
section 1356 in connection with the application of 
section 1357 or 1358.’’. 
(b) REGULATORY AUTHORITY FOR ALLOCATION OF 
CREDITS, INCOME, AND DEDUCTIONS.—Section 1358 of 
the Internal Revenue Code of 1986 (relating to allocation 
of credits, income, and deductions) is amended— 
(1) by striking ‘‘in accordance with this sub-
section’’ in subsection (c) and inserting ‘‘to the ex-
tent provided in such regulations as may be pre-
scribed by the Secretary’’, and 
(2) by adding at the end the following new sub-
section: 
‘‘(d) REGULATIONS.—The Secretary shall prescribe 
regulations consistent with the provisions of this sub-
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chapter for the purpose of allocating gross income, deduc-
tions, and credits between or among qualifying shipping 
activities and other activities of a taxpayer.’’. 
(c) CONFORMING AMENDMENTS.— 
(1) Section 1355(a)(4) of the Internal Revenue 
Code of 1986 is amended by striking ‘‘exclusively’’. 
(2) Section 1355(b)(1)(B) of such Code is 
amended by striking ‘‘as a qualifying vessel’’ and in-
serting ‘‘in the transportation of goods or pas-
sengers’’. 
(3) Section 1355 of such Code is amended— 
(A) by striking subsection (g), and 
(B) by redesignating subsection (h) as sub-
section (g). 
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act. 
Æ 
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