Instructions For Form 8902 - Alternative Tax On Qualifying Shipping Activities


Instructions for Form 8902
Department of the Treasury
Internal Revenue Service
(Rev. September 2017)
Alternative Tax on Qualifying Shipping Activities
Such vessel is owned by, or
The vessel is used as a qualifying
Section references are to the Internal
Revenue Code unless otherwise noted.
chartered (including a time charter) to,
vessel by the person to whom
the person, or the person provides
ultimately chartered.
Future Developments
services for such vessel pursuant to
U.S. foreign trade. The term “U.S.
an operating agreement; and
foreign trade” means the
For the latest information about
Such vessel is in use as a qualifying
transportation of goods or passengers
developments related to Form 8902
vessel during such period.
between a place in the United States
and its instructions, such as
Qualifying vessel. A self-propelled
and a foreign place or between
legislation enacted after they were
(or combination self-propelled and
foreign places.
published, go to
non-self-propelled) U.S. flag vessel of
See section 1355 for more
General Instructions
not less than 6,000 deadweight tons
definitions and special rules that apply
used exclusively in the U.S. foreign
with respect to the above definitions.
trade during the period the election is
Purpose of Form
Partnerships and Other
in effect.
Form 8902 is used by qualifying
Pass-Through Entities
Shipping activity requirement. A
vessel operators (defined below) who
corporation meets this requirement for
In applying these rules to a partner in
are making an alternative tax election
any tax year only if the following
a partnership:
under section 1354(a) or who have
requirement is met for each of the 2
Each partner is treated as operating
made such an election previously.
preceding tax years: On average
vessels operated by the partnership;
The form is used to make such an
during the tax year, at least 25% of the
Each partner is treated as
election or report the termination of
aggregate tonnage of qualifying
conducting the activities conducted by
such an election, to report information
vessels used by the corporation was
the partnership; and
relating to such an election, and to
owned by such corporation or
The extent of a partner's ownership,
compute the alternative tax.
chartered to such corporation on
charter, or operating agreement
Who Must File
bareboat charter terms (see definition
interest in any vessel operated by the
partnership will be determined on the
Form 8902 must be filed by a
basis of the partner's interest in the
qualifying vessel operator (defined
Special rule for first year of
below) who is making an alternative
election. A corporation meets this
tax election under section 1354(a) or
requirement for the first tax year for
A similar rule applies to other
who is reporting the termination of
which this election is in effect only if
pass-through entities.
such an election. The form must also
this requirement is met for the
be used by a qualifying vessel
Specific Instructions
preceding tax year.
operator who has a valid election in
Controlled groups. A corporation
effect to report information pertaining
Part I. Section 1354
that is a member of a controlled group
to that election and to compute the
Election or Termination
meets this requirement only if such
alternative tax.
requirement is met when determined
Item B
How To File
by treating all members of such group
as one person.
A corporation must make the
File Form 8902 by attaching it to the
alternative tax election on or before
corporation's Form 1120 or Form
Bareboat charters. A person is
the due date (including extensions of
treated as operating and using a
time to file) of the income tax return for
vessel that it has chartered out on
the tax year for which the election is
bareboat charter terms only if:
The vessel is (a) temporarily
Qualifying vessel operator. The
surplus to the person's requirements
Election by a member of a control-
term “qualifying vessel operator”
and the term of the charter does not
led group. An election under section
means any corporation that operates
exceed 3 years, or (b) bareboat
1354(a) by a member of a controlled
one or more qualifying vessels and
chartered to a member of a controlled
group applies to all qualifying vessel
meets the shipping activity
group which includes such person or
operators that are members of such
requirement. See the definitions of
to an unrelated person who
these terms below.
sub-bareboats or time charters the
Item C
Operating a vessel. Except as
vessel to such a member (including
provided in the definition of bareboat
Generally, a revocation of an election
the owner of the vessel); and
charters below, a person is treated as
under section 1354(a) made:
operating any vessel during any
period if:
May 02, 2017
Cat. No. 39897X


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