Publication 595 (Rev. February 2006) - Capital Construction Fund For Commercial Fishermen Page 3
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72. Any nontaxable return of capital from either (a) or (b),
4. Any interest (not including tax-exempt interest from
state and local bonds), most dividends, and other
below.
ordinary income earned on the assets in your CCF
a. The sale or other disposition of agreement ves-
account.
sels.
b. Insurance or indemnity proceeds attributable to
Tax Treatment of CCF Deposits
agreement vessels.
This section explains the tax treatment of income used as
3. Any tax-exempt interest earned on state or local
the basis for CCF deposits.
bonds in your CCF account.
Capital gains. Do not report any transaction that pro-
duces a capital gain if you deposit the net proceeds into
Capital gain account. The capital gain account consists
your CCF account. This treatment applies to either of the
of amounts attributable to the following items reduced by
following transactions.
any capital losses from assets held in your CCF account
•
for more than 6 months.
The sale or other disposition of an agreement ves-
sel.
1. Any capital gain from either of the following sources.
•
The receipt of insurance or indemnity proceeds at-
a. The sale or other disposition of agreement ves-
tributable to an agreement vessel.
sels held for more than 6 months.
Depreciation recapture. Do not report any transaction
b. Insurance or indemnity proceeds attributable to
that produces depreciation recapture if you deposit the net
agreement vessels held for more than 6 months.
proceeds into your CCF account. This treatment applies to
either of the following transactions.
2. Any capital gain from assets held in your CCF ac-
count for more than 6 months.
•
The sale or other disposition of an agreement ves-
sel.
Ordinary income account. The ordinary income account
•
The receipt of insurance or indemnity proceeds at-
consists of amounts attributable to the following items.
tributable to an agreement vessel.
1. Any earnings (without regard to the carryback of any
Earnings from operations. Report earnings from the op-
net operating or net capital loss) from the operation
eration of agreement vessels on your Schedule C or C-EZ
of agreement vessels in the fisheries of the United
(Form 1040) even if you deposit part of these earnings into
States or in the foreign or domestic commerce of the
your CCF account. You subtract any part of the earnings
United States.
you deposited into your CCF account from the amount you
2. Any capital gain from the following sources reduced
would otherwise enter as taxable income on Form 1040,
by any capital losses from assets held in your CCF
line 43 (for 2005). Next to line 43, write “CCF” and the
account for 6 months or less.
amount of the deposits. Do not deduct these CCF deposits
on Schedule C or C-EZ (Form 1040).
a. The sale or other disposition of agreement ves-
If you deposit earnings from operations into your
sels held for 6 months or less.
!
CCF account and you must complete other
b. Insurance or indemnity proceeds attributable to
forms such as Form 6251, Alternative Minimum
CAUTION
agreement vessels held for 6 months or less.
Tax (Individuals), or a worksheet for Schedule D (Form
1040), you will need to make an extra computation. When
c. Any capital gain from assets held in your CCF
the other form instructs you to use the amount from Form
account for 6 months or less.
1040, line 41 (for 2005), do not use that amount. Instead,
add Form 1040, lines 42 and 43 (for 2005), and use that
3. Any ordinary income (such as depreciation recap-
amount.
ture) from either of the following sources.
Self-employment tax. You must use your net profit or
a. The sale or other disposition of agreement ves-
loss from your fishing business to figure your self-employ-
sels.
ment tax. Do not reduce your net profit or loss by any
b. Insurance or indemnity proceeds attributable to
earnings from operations you deposit into your CCF ac-
agreement vessels.
count.
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