Definitions.

(1) The New York items of tax preference of a nonresident individual, estate or trust are those Federal items of tax preference, as defined in the laws of the United States (see section 57 of the Internal Revenue Code), which are derived from or connected with New York State sources, modified in accordance with the modifications, described in sections 122.3 and 122.6 of this Title, which are derived from or connected with New York State sources, and increased by any net operating loss used to reduce the sum of the New York items of tax preference in a previous year (see paragraph [c] [2] of this section). The New York items of tax preference of a nonresident estate or trust include only those items of tax preference which are properly apportioned to such estate or trust in accordance with the laws of the United States and which are derived from or connected with New York State sources.

(2) For purposes of this Part, the New York State personal income tax is the ordinary tax, reduced by the following credits:

(i) the investment credit and the retail enterprise credit (see section 106.1 of this Title);

(ii) the credit for household and dependent care services necessary for gainful employment (see section 106.3 of this Title);

(iii) the credit for sales or compensating use taxes paid upon the purchase of any catalytic, purifying or bleaching chemical agent (see section 106.4 of this Title);

(iv) the mortgage recording tax credit (see section 106.6 of this Title); and

(v) the accumulation distribution credit allowable to certain nonresident beneficiaries of a trust (see Part 140 of this Article).