From the Maritime Practice.

New Funding To Be Made Available For U.S. Flag Vessel Construction

July, 2000

Early in November, 1999, Representatives McCrery (R-La.) and Jefferson (D-La) in the House joined Sen. John Breaux (D-La) to sponsor new legislation that would change U.S. tax laws to liberalize the use of the Capital Construction Fund by U.S. flag operators not only to fund new ship construction in U.S. shipyards, but also to lease vessels and acquire related equipment. The Fund allows carriers to accumulate funds in a tax-deferred account, much like an IRA or 401(k) account, and to use an accelerated depreciation method for covered assets. For example, the bill would allow investments in foreign built ships that are re-flagged in the United States to be depreciated in one year rather than over ten years, as provided under current law. The bill was introduced too late for action this year, but its proponents hope to see the bill passed before the current Congress adjourns in 2000. If you have questions about any of these proposed legislative initiatives that will be before Congress in the coming year, contact JoAnne Zawitoski at (410) 576-4899 or at “jzawitoski@mail.semmes.com