N.Y. Comp. Codes R. & Regs. tit. 20 § 140.1
Tax Law, § 640
A nonresident beneficiary of a trust, whose New York adjusted gross income includes all or part of an accumulation distribution, as defined in section 665 of the Internal Revenue Code, is entitled to a credit determined under this Part against the New York State personal income tax otherwise due from him for the taxable year. The amount of the credit is the portion of the excess tax, as defined in subdivision (b) of this section, paid by the trust for each prior taxable year affected by the accumulation distribution, which is attributable to the amount included in the beneficiary's New York adjusted gross income for the taxable year with respect to the accumulation distribution and any modifications (net change) required to be made by section 139.3 of this Article; see subdivision (c) of this section. See section 140.2 of this Part for limitations on the amount of accumulation distribution credit which may be claimed under this Part.
For purposes of this Part, the term excess tax means any amount of tax paid by the trust for a prior taxable year which would not have been payable if the trust (1) had made a distribution to beneficiaries in the amount deemed to have been distributed during such prior taxable year under section 666 of the Internal Revenue Code, (2) had allocated to the beneficiary the beneficiary's share of the redetermined net change (see section 139.3 of this Article) by reason of the accumulation distribution, and (3) had eliminated from the recomputed New York taxable income of the trust that portion of the amount of any of the New York modifications relating to amounts allocated to principal which are no longer includible in the New York taxable income of such trust by reason of the accumulation distribution.
For purposes of this Part, the amounts of modifications determined under section 139.3 of this Article and allocated among the nonresident trust and its beneficiaries as required by section 139.4 of this Article must be reallocated for any year affected by an accumulation distribution to take into account the amounts of Federal distributable net income deemed to have been distributed in said year by reason of the accumulation distribution.
No credit under this Part is allowed with respect to any amount for which a modification is allowable under section 112.3(e)(3) of this Title. Credit under this Part is allowable only to the extent that the accumulation distribution is included in the nonresident beneficiary's New York adjusted gross income.
As used in this Part, the term nonresident beneficiaryincludes a nonresident individual, estate or trust.
N.Y. Comp. Codes R. & Regs. Tit. 20 § 140.1