Net operating loss restoration.

(i) General. The amount of the net operating loss used in a prior year to reduce the sum of the New York items of tax preference of a resident taxpayer must be treated as a New York item of tax preference and added to the total Federal items of tax preference in the next succeeding taxable year or years, in order of time, in which such net operating loss carryover reduces Federal taxable income.

(ii) Priority of reduction. If a portion of a net operating loss was used in a prior taxable year to reduce the sum of the New York items of tax preference of a resident taxpayer, such portion is deemed to reduce Federal taxable income in succeeding taxable years only after the portion of such net operating loss not so used in the prior taxable year is first used to reduce Federal taxable income in such succeeding taxable year.