text: SECTION 1. TAXATION OF UNITED STATES CRUISE INDUSTRY INCOME OF 
                NONRESIDENT ALIENS AND FOREIGN CORPORATIONS.
  
      (a) United States Cruise Industry Income Treated as Effectively 
  Connected to the Conduct of a Trade or Business Within the United 
  States.--
              (1) Income from sources without the united states.--
                      (A) In general.--Paragraph (4) of section 864(c) of 
                  the Internal Revenue Code of 1986 is amended by 
                  redesignating subparagraph (D) as subparagraph (E) and 
                  by inserting after subparagraph (C) the following new 
                  subparagraph:
                      ``(D) United states cruise industry income.--
                              ``(i) In general.--United States cruise 
                          industry income shall be treated as effectively 
                          connected with the conduct of a trade or 
                          business within the United States.
                              ``(ii) United states cruise industry 
                          income.--For purposes of this subparagraph, the 
                          term `United States cruise industry income' 
                          means income attributable to any covered 
                          passenger cruise (as defined in paragraph (8)), 
                          including income directly or indirectly 
                          attributable to the carriage of passengers and 
                          any on-board or off-board activities incidental 
                          to such covered passenger cruise.''.
                      (B) Covered passenger cruise.--Subsection (c) of 
                  section 864 of such Code is amended by adding at the 
                  end the following new paragraph:
              ``(8) Covered passenger cruise.--For purposes of paragraph 
          (4)(C)--
                      ``(A) Definition.--
                              ``(i) In general.--The term `covered 
                          passenger cruise' means a voyage of a 
                          commercial passenger cruise vessel--
                                      ``(I) that extends over 1 or more 
                                  nights, and
                                      ``(II) during which passengers 
                                  embark or disembark the vessel in the 
                                  United States.
                              ``(ii) Exceptions for certain voyages.--
                          Such term shall not include any voyage--
                                      ``(I) on any vessel owned or 
                                  operated by the United States, a State, 
                                  or any subdivision thereof,
                                      ``(II) which occurs exclusively on 
                                  the inland waterways of the United 
                                  States, or
                                      ``(III) in which a vessel in the 
                                  usual course of employment proceeds, 
                                  without an intervening foreign port of 
                                  call from one port or place in the 
                                  United States to the same port or place 
                                  or to another port or place in the 
                                  United States.
                      ``(B) Passenger cruise vessel.--For purposes of 
                  subparagraph (A)--
                              ``(i) In general.--The term `passenger 
                          cruise vessel' means any passenger vessel 
                          having berth or stateroom accommodations for at 
                          least 250 passengers.
                              ``(ii) Exceptions.--Such term shall not 
                          include any ferry, recreational vessel, sailing 
                          school vessel, small passenger vessel, offshore 
                          supply vessel, or any other vessel determined 
                          under regulations by the Secretary to be 
                          excluded from the application of this part.
                              ``(iii) Definitions.--Any term used in this 
                          section which is used in chapter 21 of title 
                          46, United States Code, shall have the meaning 
                          given such term under section 2101 of such 
                          title.''.
                      (C) Conforming amendment.--Subparagraph (A) of 
                  section 864(c)(4) of such Code is amended by striking 
                  ``subparagraphs (B) and (C)'' and inserting 
                  ``subparagraphs (B), (C), and (D)''.
              (2) Income from sources within the united states.--
          Paragraph (4) of section 887(b) of such Code is amended by 
          adding at the end the following flush sentence:
  ``The preceding sentence shall not apply to with respect to any United 
  States source gross transportation income which is United States cruise 
  industry income (as defined in section 864(c)(4)(C)(ii)).''.
      (b) Repeal of Exemption From Gross Income for Certain Taxpayers.--
              (1) Nonresident aliens.--Paragraph (1) of section 872(b) of 
          the Internal Revenue Code of 1986 is amended by inserting 
          ``(other than United States cruise industry income (as defined 
          in section 864(c)(4)(C)))'' after ``or ships''.
              (2) Foreign corporations.--Paragraph (1) of section 883(a) 
          of such Code is amended by inserting ``(other than United 
          States cruise industry income (as defined in section 
          864(c)(4)(C)))'' after ``or ships''.
      (c) Income Tax Treaties.--Section 894 of the Internal Revenue Code 
  of 1986 is amended by adding at the end the following new subsection:
      ``(d) Special Rule for United States Cruise Industry Income.--
  Notwithstanding subsection (a), no tax exemption or reduced tax rate 
  shall be permitted under any treaty of the United States with respect 
  to United States cruise industry income (as defined in section 
  864(c)(4)(C)).''.
      (d) Effective Date.--The amendments made by this section shall 
  apply to income attributable to voyages made after the date of the 
  enactment of this Act.
target: Amends the Internal Revenue Code to treat United States cruise industry income as effectively connected with the conduct of a trade or business within the United States (thus subjecting such income to U.S. income taxation). Defines &quot;United States cruise industry income&quot; as income attributable to a voyage of a commercial passenger cruise vessel (a passenger vessel having berth or stateroom accommodations for at least 250 passengers) that extends over 1 or more nights and during which passengers embark or disembark the vessel in the United States. Prohibits any tax exemption or reduced tax rate under any U.S. treaty with respect to United States cruise industry income. 
feat_title: A bill to amend the Internal Revenue Code of 1986 to provide that income attributable to certain passenger cruise voyages beginning or ending in the United States shall be treated as effectively connected with the conduct of a trade or business within the United States.