Pro rata allocation.

(i) assign an equal portion of each S corporation item, as described in subdivision (a) of this section, to each day of the S corporation's taxable year for Federal income tax purposes;

(ii) multiply each of the amounts in subparagraph (i) of this paragraph by a fraction, the numerator of which is the number of days in the S short year, (as defined in section 208[1-A] of the Tax Law to mean the portion of the taxable year ending before the first day for which the S termination is effective) and the denominator of which is the number of days in the S termination year;

(iii) the amounts so determined in subparagraph (ii) of this paragraph are the pro rata shares of such S corporation items described in subdivision (a) of this section. The pro rata share of such items determined with respect to the reductions for taxes under section 1366(f)(2) and (3) of the Internal Revenue Code is subject to the modification required by section 612(b)(18) of the Tax Law (see section 112.2 [o] of this Part);

(iv) the balance of the amounts so determined in subparagraph (ii) of this paragraph are attributable to the C short year (as defined in section 208[1-A] of the Tax Law to mean the portion of the taxable year beginning on the first day the New York S election terminates) and are subject to the modifications required by sections 612(b)(19), 612(b)(20) and 612(c)(22) of the Tax Law (see, respectively, sections 112.2[p], 112.2[q] and 112.3[r] of this Part).