Income taxes.

(1) General. Income taxes imposed by New York State or any other taxing jurisdiction, to the extent deductible in determining Federal adjusted gross income and not credited against Federal income tax. (See section 612[b][3] of the Tax Law.) Where New York City unincorporated business income tax was deducted in determining Federal adjusted gross income, the amount of such tax must be added to Federal adjusted gross income, since income taxes are not deductible for New York State personal income tax purposes. Where, however, a particular tax is not deducted in determining Federal adjusted gross income but is credited against the amount of Federal income tax, no addition is necessary. For example, where the amount of foreign income tax is credited against the total Federal income tax of a taxpayer, no modification need be made for the amount of such income tax credit since it was not deducted in determining Federal adjusted gross income.

(2) Shareholders of S corporations. In the case of a shareholder of an S corporation, (i) where the election provided for in section 660(a) of the Tax Law is in effect, with regard to the taxes imposed upon or payable by such S corporation, the term income taxes as used in paragraph (1) of this subdivision shall include the Franchise Tax on Business Corporations imposed under article 9-A of the Tax Law, regardless of the measure of such tax; (ii) where the election provided for in section 660(a) of the Tax Law is in effect, or where such election cannot be made, such term income taxes shall not otherwise include any taxes imposed by this State or any other state of the United States, or any political subdivision of this State ( e.g., the New York City General Corporation Tax under chapter 6 of title 11 of the Administrative Code of the City of New York) or any other state, or the District of Columbia imposed upon or payable by such S corporation.