Rev. Rul. 58-296

Payments received for agreements to retain ships under American registry procured for the purpose of enabling the payors to meet the requirements of the Maritime Administration under the temporary policy in effect between August 16, 1954, and December 17, 1954, so as to be able to transfer like ships to foreign registry, constitute ordinary income and not capital gain. Such an agreement does not constitute a sale or exchange of property. The privilege passing under the agreement is a temporary privilege created and suspended by administrative action of a governmental agency and does not constitute property within the purview of section 1221 of the Internal Revenue Code of 1954.

Payments made for agreements of other shipowners to retain ships under American registry, so that like ships of the payors may be transferred to foreign registry, are payments increasing the value of such ships of the payor and, therefore constitute capital expenditures.