118 STAT. 1453 PUBLIC LAW 108–357—OCT. 22, 2004 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. ‘‘(c) SHIPPING ACTIVITY REQUIREMENT.—For purposes of this section— ‘‘(1) IN GENERAL.—Except as otherwise provided in this subsection, a corporation meets the shipping activity require ment of this subsection for any taxable year only if the require ment of paragraph (4) is met for each of the 2 preceding taxable years. ‘‘(2) SPECIAL RULE FOR 1ST YEAR OF ELECTION.—A corpora tion meets the shipping activity requirement of this subsection for the first taxable year for which the election under section 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— ‘‘(A) by treating all members of such group as 1 person, and ‘‘(B) by disregarding vessel charters between members of such group. ‘‘(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 ves sels used by the corporation were owned by such corporation or chartered to such corporation on bareboat charter terms. ‘‘(d) ACTIVITIES CARRIED ON PARTNERSHIPS, ETC.—In applying this subchapter to a partner in a partnership— ‘‘(1) each partner shall be treated as operating vessels operated by the partnership, ‘‘(2) each partner shall be treated as conducting the activi ties conducted by the partnership, and ‘‘(3) the extent of a partner’s ownership or charter interest in any vessel owned by or chartered to the partnership shall be determined on the basis of the partner’s interest in the partnership. A similar rule shall apply with respect to other pass thru entities. ‘‘(e) EFFECT OF TEMPORARILY CEASING TO OPERATE A QUALI FYING VESSEL.— ‘‘(1) IN GENERAL.—For purposes of subsections (b) and (c), an electing corporation shall be treated as continuing to use a qualifying vessel during any period of temporary cessation if the electing corporation gives timely notice to the Secretary stating— ‘‘(A) that it has temporarily ceased to operate the quali fying vessel, and ‘‘(B) its intention to resume operating the qualifying vessel. ‘‘(2) NOTICE.—Notice shall be deemed timely if given not later than the due date (including extensions) for the corpora tion’s tax return for the taxable year in which the temporary cessation begins. ‘‘(3) PERIOD DISREGARD IN EFFECT.—The period of tem porary cessation under paragraph (1) shall continue until the earlier of the date on which— Applicability.
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