§ 4-a. Credit relating to stock transfer tax. (1) A taxpayer shall be
allowed a credit, to be credited or refunded in the manner hereinafter
provided in this section, against the tax imposed by this part. The
amount of such credit shall be fifty per cent of the tax incurred in
market making transactions under the provisions of article twelve of the
tax law on such transactions subject to such tax occurring on and after
August first, nineteen hundred seventy-six and paid by such taxpayer
(except when such tax shall have been paid pursuant to section two
hundred seventy-nine-a of such tax law).

(2) For purposes of this subsection:

(a) the term "taxpayer" shall mean any corporation subject to tax
under this part registered with the United States securities and
exchange commission in accordance with subsection (b) of section fifteen
of the securities exchange act of nineteen hundred thirty-four, as
amended, and acting as a dealer in a transaction described in paragraph
(b) of this subdivision, and

(b) the term "market making transaction" shall mean any transaction
involving a sale (including a short sale) by a dealer of shares or
certificates subject to the tax imposed by article twelve of the tax
law, provided such shares or certificates are sold:

(i) as stock in trade or inventory or as property held for sale in the
ordinary course of such dealer's trade or business (including transfers
which are part of an underwriting),

(ii) in (a) a bona fide arbitrage transaction; (b) a bona fide hedge
transaction involving a long or short position in any equity security
and a long or short position in a security entitling the holder to
acquire or sell such equity security; or (c) a risk arbitrage
transaction in connection with a merger, acquisition, tender offer,
recapitalization, reorganization, or similar transaction, or

(iii) to offset a transaction made in error.

Provided, however, that, except as to subparagraph (ii) (c) of this
paragraph, the term "market making transaction" shall not include any
sale of shares or certificates identified in such dealer's records as a
security held for investment within the meaning of section twelve
hundred thirty-six of the internal revenue code.

(3) The credit allowed under this section for any taxable year shall
be deemed to be an overpayment of tax by the taxpayer to be credited or
refunded in accordance with the provisions of section seventy-seven of
this title, except as otherwise provided in subdivision three of section
six and subdivision eleven of section eight of this part; provided,
however, that the provisions of this chapter notwithstanding, the amount
to be refunded pursuant to this section shall not be paid prior to the
first day of the eighth month following the close of the taxable year,
and the provisions of subdivision three of section seventy-nine of this
title notwithstanding, interest shall be allowed and paid on the
overpayment of the credit under this section from the first day of the
eleventh month following the close of the taxable year, or three months
after a claim for the credit or refund provided for in this section has
been filed, whichever is later.

(4) Provided, however, that the credit provided under this subsection
shall be allowed only to the extent that the amount of credit allowable
with respect to market making transactions under the provisions of this
subsection (determined without regard to the provisions of this
subdivision) exceeds fifty percent of all rebates (provided for under
the provisions of section two hundred eighty-a of article twelve of the
tax law) allowed for such taxes incurred in the same market making
transactions with respect to which the credit is allowed. No credit
shall be allowed under this subsection with respect to any tax incurred
in market making transactions occurring on or after October first,
nineteen hundred eighty-one.