Part I: Election or Termination
Four boxes: a prior election, a new election for this and later years, a revocation, or an automatic termination, each with dates.
8902
Alternative Tax on Qualifying Shipping Activities
- Agency
- IRS
- Revision
- Rev. April 2018
- Fillable fields
- 148
- Pages
- 2
- Official source
- IRS form page
- Checked
- October 21, 2026
Form 8902: Alternative Tax on Qualifying Shipping Activities
Form 8902 is filed by qualifying vessel operators. The IRS About Form 8902 page says they file it to make an alternative tax election under section 1354(a), report the termination of such an election, report information relating to such an election, and compute the alternative tax.
The instructions define a qualifying vessel operator as a corporation that operates one or more qualifying vessels and meets the shipping activity requirement. Line H shows gross income from qualifying shipping activities that is excluded from gross income on the corporation's return. The alternative tax is then figured on notional shipping income, built from each vessel's net tons, days operated in U.S. foreign trade and ownership percentage.
The form is attached to the corporation's Form 1120 or Form 1120-F. You can fill out Form 8902 free in your browser on this page and download it without an account.
What's on Form 8902
Part II: Other Information
Electing group questions, then gross income from core qualifying, secondary and incidental activities, and the excluded total on line H.
Part III: Vessel Information
Columns A to D for each vessel's name, IMO number, USCG VIN number, flag, type, U.S. ownership, type of ownership and use, and date placed in service.
Part IV: Notional Shipping Income
Lines 12 to 28 figure each vessel's daily and annual notional shipping income from its tonnage, days in U.S. foreign trade and ownership percentage.
Part V: Alternative Tax
Line 29 totals the annual notional shipping income and line 30 multiplies it by the highest rate of tax specified in section 11.
How to fill out Form 8902
- 1
Part I
Check the box that applies. The instructions say the election is made on or before the due date, including extensions, of the return for the year it is made.
- 2
Items E and F
Answer whether the corporation is in an electing group. If yes, enter the number of corporations and vessels, and attach a worksheet for members with secondary or incidental income.
- 3
Lines G and H
Enter core income on G(1) and split secondary income at 20% and incidental income at 0.1% of G(1), attaching schedules. Line H adds G(1), G(2)(a) and G(3)(a).
- 4
Part III
Complete one column per qualifying vessel. On line 9 enter O, L or CL for ownership, and on line 10 enter BB, TC or OI for vessel use.
- 5
Part IV
Follow lines 12 to 28 for each vessel. If any of its income was excluded under section 883 or otherwise, complete lines 23 to 27; if not, enter line 22 on line 28.
- 6
Part V
Add all columns of line 28 on line 29, multiply by the section 11 rate on line 30, and carry it to the Other taxes line of Schedule J of Form 1120 or Form 1120-F.
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Where it goes and what to watch
Attach to the corporate return
The instructions say to file Form 8902 by attaching it to the corporation's Form 1120 or Form 1120-F.
Election timing
The instructions say the election is made on or before the due date, including extensions of time to file, of the income tax return for the tax year of the election.
Revocation dates
The instructions say a revocation made on or before the 15th day of the 3rd month of the tax year is generally effective on the 1st day of that year, and a later one on the 1st day of the next year.
Electing again
After a revocation or termination, the instructions say a new election is not available for any tax year before the fifth tax year that begins after the first year of termination, unless the IRS consents.
More than four vessels
The instructions say to attach separate sheets for Parts III and IV in the same size and format as Form 8902, and enter the sum of all columns on line 29.
Related forms
Who files Form 8902?
The form is completed by a corporation and attached to its income tax return. It is not an individual form.
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Questions about Form 8902
What is a qualifying vessel?
The instructions say a self-propelled (or combination) U.S. flag vessel of not less than 6,000 deadweight tons used exclusively in the U.S. foreign trade while the election is in effect.
What is the shipping activity requirement?
The instructions say that for each of the 2 preceding tax years, on average at least 25% of the tonnage of qualifying vessels used was owned by the corporation or chartered to it on bareboat charter terms.
What does U.S. foreign trade mean?
The instructions say it means transporting goods or passengers between a place in the United States and a foreign place, or between foreign places.
What rate applies on line 30?
The instructions say that for tax years beginning after December 31, 2017, the alternative tax uses 21% (0.21), with a blending worksheet for fiscal years that straddle January 1, 2018.
Is the line H income reported on Form 1120?
The instructions say not to include the line H amount in gross income on Form 1120 or Form 1120-F, while amounts on lines G(2)(b) and G(3)(b) are included.
Who can file Form 8902?
The About page says qualifying vessel operators file it. The instructions define these as corporations operating qualifying vessels that meet the shipping activity requirement.