§ 292. Unrelated business taxable income. (a) The unrelated business\ntaxable income of a taxpayer subject to the tax imposed by section two\nhundred ninety shall be such taxpayer's federal unrelated business\ntaxable income, as defined in the laws of the United States for the\ntaxable year, with the following modifications:\n (1) There shall be added to federal unrelated business taxable income\nthe amount of any tax imposed under this article.\n (2) There shall be subtracted from federal unrelated business taxable\nincome the amount of any refund or credit for overpayment of a tax\nimposed under this article or article twenty-three of this chapter.\n (3) The net operating loss deduction which shall be allowed shall be\nthe same as the net operating loss deduction allowed under paragraph six\nof subsection (b) of section five hundred twelve of the internal revenue\ncode of nineteen hundred fifty-four, except that\n (A) any net operating loss included in determining such deduction\nshall be adjusted to reflect the addition and subtraction from unrelated\nbusiness taxable income required by paragraphs one and two of this\nsubdivision,\n (B) such deduction shall not include any net operating loss sustained\nduring any taxable year beginning prior to January first, nineteen\nhundred seventy, or during any taxable year in which the taxpayer was\nnot subject to the tax imposed by this article, and\n (C) such deduction shall not exceed the deduction for the taxable year\nallowable under paragraph six of subsection (b) of section five hundred\ntwelve of the internal revenue code of nineteen hundred fifty-four.\n (4) There shall be subtracted from federal unrelated business taxable\nincome any amount which is included therein solely by reason of the\napplication of section 501(m)(2)(A) or 512(a)(7) of the internal revenue\ncode.\n (5) Shareholders of S corporations. (A) In the case of a shareholder\nof an S corporation,\n (i) where the election provided for in subsection (a) of section six\nhundred sixty of this chapter is in effect with respect to such\ncorporation, there shall be added to federal unrelated business taxable\nincome an amount equal to the shareholder's pro rata share of the\ncorporation's reductions for taxes described in paragraphs two and three\nof subsection (f) of section thirteen hundred sixty-six of the internal\nrevenue code, and\n (ii) where such election has not been made with respect to such\ncorporation, there shall be subtracted from federal unrelated business\ntaxable income any items of income of the corporation included therein,\nand there shall be added to federal unrelated business taxable income\nany items of loss or deduction included therein, and\n (iii) in the case of a New York S termination year, the amount of any\nsuch items of S corporation income, loss, deduction and reductions for\ntaxes shall be adjusted in the manner provided in paragraph two or three\nof subsection (s) of section six hundred twelve of this chapter.\n (B) In the case of a shareholder of a corporation which was, for any\nof its taxable years beginning after nineteen hundred ninety-seven, a\nfederal S corporation but a New York C corporation:\n (i) There shall be added to federal unrelated business taxable income\nS corporation distributions to the extent not included therein because\nof the application of section thirteen hundred sixty-eight or subsection\n(e) of section thirteen hundred seventy-one of the internal revenue\ncode, which represent income not previously subject to tax under this\narticle because the election provided for in subsection (a) of section\nsix hundred sixty of this chapter had not been made. Any such\ndistribution treated in the manner described in paragraph two of\nsubsection (b) of such section thirteen hundred sixty-eight shall be\ntreated as ordinary income for purposes of this article.\n (ii) Where gain or loss is included in unrelated business taxable\nincome upon the disposition
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