To derive Oregon taxable income:

(1) There shall be added to federal taxable income an amount equal to the amount of income which the taxpayer defers under section 607 of the Merchant Marine Act of 1936 — Capital Construction Fund (46 U.S.C. § 1177), as amended, or under section 7518 of the Internal Revenue Code.

(2) There shall be subtracted from federal taxable income all nonqualified withdrawals considered to be ordinary income or capital gain under section 607 of the Merchant Marine Act of 1936 — Capital Construction Fund (46 U.S.C. § 1177), as amended, or under section 7518 of the Internal Revenue Code, and included in income for federal income tax purposes.

(3) No adjustments to basis shall be made for Oregon tax purposes to property on account of section 607 of the Merchant Marine Act of 1936 — Capital Construction Fund (46 U.S.C. § 1177), as amended, or under section 7518 of the Internal Revenue Code. There shall be added to or subtracted from federal taxable income those amounts necessary to carry out the purposes of this subsection. [1983 c.162 § 20; 1987 c.293 § 40]

[1969 c.493 § 73; 1973 c.402 § 23; repealed by 1983 c.162 § 57]