S 1656

S 1656 IS

To amend the Internal Revenue Code of 1986 to provide for the treatment of S corporations for purposes of election of the alternative tax on qualifying shipping activities, and for other purposes.

September 9, 2009

Ms. STABENOW (for herself, Mr. VOINOVICH, Mr. LEVIN, and Ms. KLOBUCHAR) introduced the following bill; which was read twice and referred to the Committee on Finance

To amend the Internal Revenue Code of 1986 to provide for the treatment of S corporations for purposes of election of the alternative tax on qualifying shipping activities, and for other purposes.

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

SECTION 1. TREATMENT OF S CORPORATIONS FOR PURPOSES OF ELECTION OF THE ALTERNATIVE TAX ON QUALIFYING SHIPPING ACTIVITIES.

(a) In General- Section 1352 of the Internal Revenue Code of 1986 is amended to read as follows:

‘SEC. 1352. ALTERNATIVE TAX ON QUALIFYING SHIPPING ACTIVITIES.

‘(a) In General- In the case of an electing corporation other than an S corporation, the tax imposed by section 11 shall be the amount equal to the sum of--

‘(1) the tax imposed by section 11 determined after the application of this subchapter, and

‘(2) a tax equal to--

‘(A) the highest rate of tax specified in section 11, multiplied by

‘(B) the notional shipping income for the taxable year.

‘(b) S Corporations- In the case of an electing corporation which is an S corporation, the notional shipping income of such S corporation shall be taken into account under section 1366 by a shareholder of such S corporation in lieu of the income excluded under section 1357.’.

(b) Surtax Imposed on Tonnage Tax Differential Amount- Subsection (f) of section 1366 of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

‘(4) SURTAX ON TONNAGE TAX DIFFERENTIAL AMOUNT- In the case of a shareholder of an S corporation which is an electing corporation for purposes of subchapter R of this chapter, the tax determined under this chapter (other than this paragraph) with respect to such shareholder for any taxable year in which the shareholder takes into account notional shipping income shall be increased by an amount equal to 15 percent of the excess, if any, of--

‘(A) the shareholder’s pro rata share of the amount which would be included in gross income of the corporation but for the application of section 1357, over

‘(B) the shareholder’s pro rata share of the notional shipping income (as defined in section 1353) of the corporation.’.

(c) Effective Date- The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.