(1)Any refund or credit for overpayment of income taxes imposed by New York State or any other taxing jurisdiction, to the extent properly included in gross income for Federal income tax purposes.#
(1) Any refund or credit for overpayment of income taxes imposed by New York State or any other taxing jurisdiction, to the extent properly included in gross income for Federal income tax purposes. This modification applies to any refund of income taxes which was actually included in Federal adjusted gross income, whether the refund represented New York State personal income taxes or the income taxes of another state, a political subdivision of any state or any foreign government. However, the modification does not include any portion of the total refund which represents interest received. Such interest, whether received in connection with a state, Federal or other income tax refund, is not exempt from New York State personal income tax since it is paid on a claim against the particular government, rather than paid on an obligation thereof arising from the exercise of its borrowing powers. (See section 612[c][7] of the Tax Law.)
(2)Shareholders of S corporations.#
(2) Shareholders of S corporations. In the case of a shareholder of an S corporation, where the election provided for in section 660(a) of the Tax Law is in effect, or where such election cannot be made, 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 have the same meaning as provided for in section 112.2(c)(2) of this Part.