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The term “controlled group” means any

activities of $20 million and gross income

vessel. If the corporation has more than 4

group which would be treated as a single

from secondary activities of $5 million.

qualifying vessels, attach separate sheets

employer under section 52(a) or (b) if

The corporation enters $20 million on line

for Parts III and IV using the same size

sections 52(a)(1) and (2) did not apply.

G(1), $4 million (20% of $20 million) on

and format as Form 8902. Also, on line

line G(2)(a), and $1 million (gross income

29, enter the sum of all columns of Part

Line G(1). Core qualifying

from secondary activities of $5 million

IV, line 28.

activities

less the $4 million limit) on line G(2)(b).

Line 9. Type of ownership

Enter on line G(1) the corporation’s gross

Example 2. The same facts as

Indicate in each column the type of

income from core qualifying activities.

above except the corporation has gross

ownership for the vessel. Enter “O” for an

Attach a schedule.

income from secondary activities of $3

owned vessel, “L” for a leased vessel,

For purposes of this election, the term

million. The corporation would enter $3

and “CL” for a capitalized lease.

“core qualifying activities” means activities

million on line G(2)(a) and zero on line

in operating qualifying vessels in United

Line 10. Type of vessel use

G(2)(b). Gross income from secondary

States foreign trade.

activities of $3 million is less than the $4

Indicate in each column the type of vessel

million limit.

Line G(2). Qualifying secondary

use. Enter “BB” for bareboat charter out,

“TC” for time charter out, and “OI” for

activities

Line G(3). Qualifying incidental

operating income.

activities

For purposes of this election, the term

‘‘qualifying secondary activities’’ means

Part IV. Notional Shipping

For purposes of this election, the term

secondary activities (defined below) but

“qualifying incidental activities” means

Income

only to the extent that the gross income

shipping-related activities if:

derived by the corporation from such

1. They are incidental to the

Line 21. Ownership percentage

activities does not exceed 20% of the

corporation’s core qualifying activities,

gross income derived by the corporation

Enter the corporation’s percentage of

2. They are not qualifying secondary

from its core qualifying activities.

ownership in the vessel. If for any period

activities, and

Secondary activities. The term

two or more persons are operators of a

3. The gross income derived by the

‘‘secondary activities’’ means:

qualifying vessel, the notional shipping

corporation from such activities does not

•

The active management or operation of

income from the operation of such vessel

exceed 0.1% of the corporation’s gross

vessels other than qualifying vessels in

for that period must be allocated among

income from its core qualifying activities.

the U.S. foreign trade,

the operators on the basis of their

•

The provision of vessel, barge,

Line G(3)(a). Amount included in the

respective ownership, charter, and

container, or cargo-related facilities or

0.1% limit. Enter on line G(3)(a) the

operating agreement interests in the

services to any person,

corporation’s gross income from

vessel.

•

Other activities of the electing

incidental activities that does not exceed

corporation and other members of its

0.1% of line G(1).

Paperwork Reduction Act Notice. We

electing group that are an integral part of

Electing groups. In the case of an

ask for the information on this form to

its business of operating qualifying

electing group, the above rules are

carry out the Internal Revenue laws of the

vessels in U.S. foreign trade, including:

applied as if the group were one entity,

United States. You are required to give us

and the 0.1% limitation is allocated

1. Ownership or operation of barges,

the information. We need it to ensure that

among the corporations in the group.

containers, chassis, and other equipment

you are complying with these laws and to

that are the complement of, or used in

Line G(3)(b). Amount that exceeds the

allow us to figure and collect the right

connection with, a qualifying vessel in

0.1% limit. Enter on line G(3)(b) the

amount of tax.

U.S. foreign trade,

corporation’s gross income from

You are not required to provide the

2. The inland haulage of cargo

incidental activities that exceeds 0.1% of

information requested on a form that is

shipped, or to be shipped, on qualifying

line G(1).

subject to the Paperwork Reduction Act

vessels in U.S. foreign trade, and

Attach a schedule showing

unless the form displays a valid OMB

3. The provision of terminal,

computations for lines G(3)(a) and (b).

control number. Books or records relating

maintenance, repair, logistical, or other

to a form or its instructions must be

Line H. Gross income from

vessel, barge, container, or cargo-related

retained as long as their contents may

qualifying shipping activities

services that are an integral part of

become material in the administration of

operating qualifying vessels in U.S.

excluded from gross income on

any Internal Revenue law. Generally, tax

foreign trade.

the corporation’s income tax

returns and return information are

The term “secondary activities” does

return

confidential, as required by section 6103.

not include any core qualifying activities.

The time needed to complete and file

Enter on line H the total of lines G(1),

Line G(2)(a). Amount included in 20%

this form will vary depending on individual

G(2)(a), and G(3)(a). Do not include this

limit. Enter on line G(2)(a) the

circumstances. The estimated average

amount in gross income on the

corporation’s gross income from

corporation’s Form 1120 or Form 1120-F.

time is: Recordkeeping, 11 hr., 43 min.;

secondary activities that does not exceed

Learning about the law or the form, 1

Furthermore, do not include on the

20% of line G(1).

hr., 3 min.; Preparing the form, 2 hr., 13

corporation’s Form 1120 or Form 1120-F

Electing groups. In the case of an

min.; Copying, assembling, and

any item of loss, deduction, or credit with

electing group, the above rules are

sending the form to the IRS, 16 min.

respect to this line H excluded income.

applied as if the group were one entity,

If you have comments concerning the

Note: The amounts entered on lines

and the 20% limitation is allocated among

G(2)(b) and G(3)(b) must be included in

accuracy of these time estimates or

the corporations in the group.

gross income on the corporation’s Form

suggestions for making this form simpler,

Line G(2)(b). Amount that exceeds the

1120 or Form 1120-F.

we would be happy to hear from you. See

20% limit. Enter on line G(2)(b) the

the instructions for the tax return with

corporation’s gross income from

Part III. Vessel Information

which this form is filed.

secondary activities that exceeds 20% of

With respect to Parts III and IV, complete

line G(1).

a separate column for each qualifying

Attach a schedule showing

computations for lines G(2)(a) and (b).

Example 1. The corporation has

gross income from core qualifying

-2-

Instructions For Form 8902 - Alternative Tax On Qualifying Shipping Activities - Department Of Treashury Page 2

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