(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.