Section 662. Computation of tax where taxpayer restores substantial amount held under claim of right

(a) General.  If:    (1) an item was included in New York adjusted gross income for a prior
  taxable year (or years) because it appeared that  the  taxpayer  had  an
  unrestricted right to such item, and
    (2)   for the current taxable year the provisions of paragraph five of
  subsection (a) of section thirteen hundred  forty-one  of  the  internal
  revenue  code  apply  to such item, then the tax imposed by this article
  for the taxable year shall be an amount equal to
    (3)  the tax for the taxable year  computed  without  regard  to  this
  section, minus
    (4)  the decrease in tax under this article for the prior taxable year
  (or years) which would result solely from the exclusion of such item (or
  portion  thereof)  from  New  York  adjusted gross income for such prior
  taxable year (or years).
    (b)   Special rules. (1) If the  decrease  in  tax  ascertained  under
  paragraph four of subsection (a) of this section exceeds the tax imposed
  by  this article for the taxable year, such excess shall be considered a
  payment of tax on the last day prescribed by law for the payment of  tax
  for  the  taxable  year,  and  shall be refunded or credited in the same
  manner as if it were an overpayment for such taxable year.
    (2)   Nonresidents  and  part-year  residents.    In  the  case  of  a
  nonresident  or  part-year  resident,  the exclusion of an item from New
  York adjusted gross income for a  prior  taxable  year  beginning  after
  nineteen  hundred eighty-seven under paragraph four of subsection (a) of
  this section shall also be reflected, as appropriate, in  the  New  York
  source fraction.