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Page 2 of 3 Fileid: … ns/I8902/201709/A/XML/Cycle03/source 11:10 - 2-May-2017
The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
On or before the 15th day of the 3rd not exceed 20% of the gross income $20 million) on line G(2)(a), and $1
month of the tax year will be effective derived by the corporation from its million (gross income from secondary
on the 1st day of that tax year. core qualifying activities. activities of $5 million less the $4
After the 15th day of the 3rd month million limit) on line G(2)(b).
Secondary activities. The term
of the tax year will be effective the 1st Example 2. The same facts as
"secondary activities" means:
day of the following tax year. above except the corporation has
The active management or
However, if the revocation specifies operation of vessels other than gross income from secondary
a date for revocation that is on or after qualifying vessels in the U.S. foreign activities of $3 million. The
the day on which the revocation is trade; corporation would enter $3 million on
made, the revocation will be effective The provision of vessel, barge, line G(2)(a) and zero on line G(2)(b).
for tax years beginning on and after container, or cargo-related facilities or Gross income from secondary
the date of revocation specified. services to any person; and activities of $3 million is less than the
Other activities of the electing $4 million limit.
Item D corporation and other members of its Line G(3). Qualifying Incidental
An election under section 1354(a) will electing group that are an integral part
Activities
be terminated effective on and after of its business of operating qualifying
the date the corporation ceases to be vessels in U.S. foreign trade, For purposes of this election, the term
a qualifying vessel operator. including: “qualifying incidental activities” means
shipping-related activities if:
Election after termination. If a 1. Ownership or operation of
qualifying vessel operator made the barges, containers, chassis, and other 1. They are incidental to the
election under section 1354(a) and equipment that are the complement corporation's core qualifying activities,
subsequently revoked the election of, or used in connection with, a 2. They are not qualifying
(Item C) or ceased to be a qualifying qualifying vessel in U.S. foreign trade; secondary activities, and
vessel operator (Item D), that operator 2. The inland haulage of cargo 3. The gross income derived by
(and any successor operator) is not shipped, or to be shipped, on the corporation from such activities
eligible to make another section qualifying vessels in U.S. foreign does not exceed 0.1% of the
1354(a) election for any tax year trade; and corporation's gross income from its
before the fifth tax year that begins core qualifying activities.
3. The provision of terminal,
after the first tax year for which the
maintenance, repair, logistical, or
termination is effective, unless the IRS Line G(3)(a). Amount included in
other vessel, barge, container, or
consents to the election. the 0.1% limit. Enter on line G(3)(a)
cargo-related services that are an
integral part of operating qualifying the corporation's gross income from
Part II. Other Information vessels in U.S. foreign trade. incidental activities that does not
exceed 0.1% of line G(1).
Question E The term “secondary activities”
The term “electing group” means a does not include any core qualifying Electing groups. In the case of an
controlled group of which one or more activities. electing group, the above rules are
applied as if the group were one
members is an electing corporation. Line G(2)(a). Amount included in entity, and the 0.1% limitation is
The term “controlled group” means 20% limit. Enter on line G(2)(a) the allocated among the corporations in
any group which would be treated as corporation's gross income from the group.
a single employer under section 52(a) secondary activities that does not
or (b) if sections 52(a)(1) and (2) did exceed 20% of line G(1). Line G(3)(b). Amount that exceeds
the 0.1% limit. Enter on line G(3)(b)
not apply. Electing groups. In the case of an the corporation's gross income from
Line G(1). Core Qualifying electing group, the above rules are incidental activities that exceeds 0.1%
applied as if the group were one
Activities of line G(1).
entity, and the 20% limitation is
Enter on line G(1) the corporation's allocated among the corporations in Attach a schedule showing
gross income from core qualifying the group. computations for lines G(3)(a) and (b).
activities. Attach a schedule.
Line G(2)(b). Amount that exceeds Line H. Gross Income From
For purposes of this election, the the 20% limit. Enter on line G(2)(b) Qualifying Shipping Activities
term “core qualifying activities” means the corporation's gross income from Excluded From Gross Income
activities in operating qualifying secondary activities that exceeds on the Corporation's Income
vessels in U.S. foreign trade. 20% of line G(1). Tax Return
Line G(2). Qualifying Attach a schedule showing Enter on line H the total of lines G(1),
Secondary Activities computations for lines G(2)(a) and (b). G(2)(a), and G(3)(a). Do not include
For purposes of this election, the term Example 1. The corporation has this amount in gross income on the
"qualifying secondary activities" gross income from core qualifying corporation's Form 1120 or Form
means secondary activities (defined activities of $20 million and gross 1120-F. Furthermore, do not include
below) but only to the extent that the income from secondary activities of on the corporation's Form 1120 or
gross income derived by the $5 million. The corporation enters $20 Form 1120-F any item of loss,
corporation from such activities does million on line G(1), $4 million (20% of
-2- Instructions for Form 8902 (Rev. 9-2017)
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