Bareboat Charters [Income Tax] Law and Legal Definition

According to 26 USCS § 1355 [Title 26. Internal Revenue Code; Subtitle A. Income Taxes; Chapter 1. Normal Taxes and Surtaxes; Subchapter R. Election to Determine Corporate Tax on Certain International Shipping Activities Using Per Ton Rate], a person is treated as operating and using a vessel that it has chartered out on bareboat charter terms only if-- (A) (i) the vessel is temporarily surplus to the person's requirements and the term of the charter does not exceed 3 years, or (ii) the vessel is bareboat chartered to a member of a controlled group which includes such person or to an unrelated person who sub-bareboats or time charters the vessel to such a member (including the owner of the vessel), and (B) the vessel is used as a qualifying vessel by the person to whom ultimately chartered.