Shipping Activity Requirement 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 corporation meets the shipping activity requirement of this subsection for any taxable year only if the requirement of paragraph (4) is met for each of the 2 preceding taxable years.

(2) Special rule for 1st year of election. A corporation meets the shipping activity requirement of this subsection for the first taxable year for which the election under section 1354(a) [26 USCS § 1354(a)] is in effect only if the requirement of paragraph (4) is met for the preceding taxable year.

(3) Controlled groups. A corporation who is a member of a controlled group meets the shipping activity requirement of this subsection only if such requirement is met determined by treating all members of such group as 1 person.

(4) Requirement. The requirement of this paragraph is met for any taxable year if, on average during such year, at least 25 percent of the aggregate tonnage of qualifying vessels used by the corporation were owned by such corporation or chartered to such corporation on bareboat charter terms.