The US Treasury Department and the Internal Revenue Service (IRS) on Thursday issued guidance on the procedure for making an election to determine corporate tax on income from certain international shipping activities under the new tonnage tax regime.
The tonnage tax regime created by the American Jobs Creation Act of 2004 allows a corporation that is a qualifying vessel operator to elect to be subject to tax on notional income from qualifying shipping activities, rather than on actual income from such activities.
However, an election is only effective if it is made by a corporation that satisfies the specified requirements for eligibility to make the election.
According to the Treasury guidance, the election is available for taxable years beginning after October 22, 2004, and is effective for the taxable year for which it is made, and for all succeeding taxable years until terminated.
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