METHOD OF ACCOUNTING FOR NAVAL SHIPBUILDERS.

SEC. 708. METHOD OF ACCOUNTING FOR NAVAL SHIPBUILDERS.(a) In General.—In the case of a qualified naval ship contract, the taxable income of such contract during the 5-taxable year period beginning with the taxable year in which the contract commencement date occurs shall be determined under a method identical to the method used in the case of a qualified ship contract (as defined in section 10203(b)(2)(B) of the Revenue Act of 1987).(b) Recapture of Tax Benefit.—In the case of a qualified naval ship contract to which subsection (a) applies, the taxpayer’s tax imposed by chapter 1 of the Internal Revenue Code of 1986 for the first taxable year following the 5-taxable year period 118 STAT. 1551 described in subsection (a) shall be increased by the excess (if any) of—(1) the amount of tax which would have been imposed during such period if this section had not been enacted, over(2) the amount of tax so imposed during such period.(c) Qualified Naval Ship Contract.—For purposes of this section:(1) In general.—The term “qualified naval ship contract” means any contract or portion thereof that is for the construction in the United States of 1 ship or submarine for the Federal Government if the taxpayer reasonably expects the acceptance date will occur no later than 9 years after the construction commencement date.(2) Acceptance date.—The term “acceptance date” means the date 1 year after the date on which the Federal Government issues a letter of acceptance or other similar document for the ship or submarine.(3) Construction commencement date.—The term “construction commencement date” means the date on which the physical fabrication of any section or component of the ship or submarine begins in the taxpayer’s shipyard.(d) Effective Date.—This section shall apply to contracts for ships or submarines with respect to which the construction commencement date occurs after the date of the enactment of this Act.