Irs Publication 595 - Tax Highlights For Commercial Fishermen

withdrawal from your CCF account, the amount

More Information

What is off-highway business use? It is

any use of fuel in a trade or business or in any

is treated as being withdrawn in the following

income-producing activity other than use in a

order from the accounts listed below.

This section briefly discussed the CCF program.

highway vehicle registered or required to be

For more detailed information, see the following

registered for use on public highways. Off-high-

1) The ordinary income account.

legislative authorities.

way business use includes fuels used in the

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2) The capital gain account.

Section 607 of the Merchant Marine Act of

following ways.

1936, as amended (46 U.S.C. 1177).

3) The capital account.

•

In stationary engines to operate genera-

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Chapter 2, Part 259 of title 50 of the Code

tors, compressors, and similar equipment.

of Federal Regulations (50 C.F.R., Part

•

For cleaning purposes.

Paying tax on nonqualified withdrawals. In

259).

general, nonqualified withdrawals are taxed

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Subchapter A, Part 3 of title 26 of the

separately from your other gross income and at

Fuel used in a motor boat does not

Code of Federal Regulations (26 C.F.R.,

the highest marginal tax rate in effect for the

qualify as fuel used for an off-highway

Part 3).

year of withdrawal. However, nonqualified with-

business use.

CAUTION

•

drawals treated as made from the capital gain

Section 7518 of the Internal Revenue

account are taxed at a rate that cannot exceed

Code (IRC 7518).

20% for individuals and 34% for corporations.

The application kit you can obtain from NMFS at

How To Claim

Partnerships and S corporations.

the address or phone number given earlier may

a Credit or Refund

TIP

Taxable nonqualified partnership with-

contain copies of some of these sources of addi-

drawals are separately stated on

tional information. Also see their web page at

This section tells you when and how to claim a

Schedule K (Form 1065), line 24, and allocated

credit or refund of excise taxes on fuels you use

to the partners on Schedule K – 1 (Form 1065),

vices/ccf.htm.

for a nontaxable use.

line 25. Taxable nonqualified withdrawals by an

S corporation are separately stated on Schedule

Credit or refund. A credit is an amount you

K (Form 1120S), line 21, and allocated to the

claim on your income tax return when you file it

How Do You Claim

shareholders on Schedule K – 1 (Form 1120S),

at the end of the year. If you meet certain re-

line 23.

quirements, you can claim a refund during the

Fuel Tax Credits and

year instead of waiting until you file your tax

return. See Claiming a Refund, later.

Refunds?

Interest. You must pay interest on the addi-

Credit only. The following taxes can only be

tional tax due to nonqualified withdrawals that

claimed as a credit.

are treated as made from either the ordinary

You may be eligible to claim a credit on your

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income or the capital gain account. The interest

income tax return for federal excise tax imposed

Tax on fuels you used for nontaxable uses

period begins on the last date for paying tax for

on certain fuels used for a nontaxable use. You

if the total for the tax year is less than

the year for which you deposited the amount you

may also be eligible to claim a quarterly refund

$750.

withdrew from your CCF account. The period

of the fuel taxes during the year, instead of

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Tax on fuel you did not include in any

ends on the last date for paying tax for the year

waiting to claim a credit on your income tax

claim for refund previously filed for the tax

in which you make the nonqualified withdrawal.

return.

year.

The interest rate on the nonqualified withdrawal

Instead of paying the fuel tax and filing for a

is simple interest. The rate is subject to change

credit or refund, you may be able to buy certain

annually and is published in the Federal Regis-

Claiming a Credit

fuel tax free. For more information, see How To

ter.

Buy Fuel Tax Free, later.

You make a claim for credit on Form 4136 and

You can also call NMFS at 301 –

attach it to your income tax return. Do not claim

Nontaxable Uses

713 – 2393 to get the current interest

a credit for any amount for which you have filed

rate.

a refund claim.

This section discusses the nontaxable uses that

may be of particular interest to fishermen. For

Interest deduction. You can deduct the in-

When to claim a credit. You can claim a fuel

information about other nontaxable uses (not

terest you pay on a nonqualified withdrawal as a

tax credit on your income tax return for the year

discussed in this section) for which a credit or

you used the fuel.

trade or business expense.

refund may be claimed, see Publication 378.

Once you have filed a Form 4136, you

Reporting the additional tax and interest.

cannot file an amended return to show

Commercial fishing. You may be eligible to

Attach a statement to your income tax return

an increase in the number of gallons of

CAUTION

claim a credit or refund of excise tax on gasoline

fuel reported on a line of that form. See the

showing your computation of the tax and the

used in a boat engaged in commercial fishing.

following discussion for when you can file a

interest on a nonqualified withdrawal. Include

Boats engaged in commercial fishing include

claim on an amended return.

the tax and interest on line 58 of Form 1040. To

only watercraft used in taking, catching,

the left of line 58, write in the amount of tax and

processing, or transporting fish, shellfish, or

Fuel tax claim on amended return. You

interest and “CCF.”

other aquatic life for commercial purposes, such

may be able to make a fuel tax claim on an

as selling or processing the catch, on a specific

amended return for the year you used the fuel.

Tax benefit rule. If any portion of your non-

trip basis. They include boats used in both fresh

Generally, if you are allowed to file an amended

qualified withdrawal is properly attributable to

and salt water fishing. They do not include boats

return, you must file it by the later of 3 years

contributions (not earnings on the contributions)

used for both sport fishing and commercial fish-

from the date you filed your original income tax

you made to the CCF account that did not re-

ing on the same trip.

return or within 2 years from the time you paid

duce your tax liability for any tax year prior to the

the income tax. A return filed early is considered

Fuel used in aircraft to locate fish is not

withdrawal year, the following tax treatment ap-

to have been filed on the due date.

fuel used in commercial fishing.

plies.

You can file an amended return to claim a

CAUTION

fuel tax credit if any of the following apply.

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The part that did not reduce your tax liabil-

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ity for any year prior to the withdrawal year

You did not claim any credit for fuel taxes

Off-highway business use. You may be eli-

is not taxed.

on Form 4136 for the tax year.

gible to claim a credit or refund of excise tax on

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That part is allowed as a net operating

fuel if you use the fuel for off-highway business

Your credit is for gasohol blending, as dis-

loss deduction.

use.

cussed in Publication 378.

Page 9

Irs Publication 595 - Tax Highlights For Commercial Fishermen - 2001 Page 9

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