§ 634. Share of a nonresident beneficiary in income from New York
sources. (a) General. The share of a nonresident beneficiary of any
estate or trust under subsection (a) of section six hundred thirty-one,
in estate or trust income, gain, loss and deduction from New York
sources shall be determined as follows:

(1) Items of distributable net income from New York sources. There
shall be determined the items of income, gain, loss and deduction,
derived from or connected with New York sources, which enter into the
definition of federal distributable net income of the estate or trust
for the taxable year (including such items from another estate or trust
of which the first estate or trust is a beneficiary). Such determination
of source shall be made in accordance with the applicable rules of
section six hundred thirty-one as in the case of a nonresident
individual.

(2) Addition or subtraction of modifications. There shall be added or
subtracted (as the case may be) the modifications described in section
six hundred eighteen, to the extent relating to the items of income,
gain, loss and deduction derived from or connected with New York sources
as determined under paragraph one of this subsection. No modification
shall be made under this subsection which has the effect of duplicating
an item already reflected in the definition of federal distributable net
income.

(3) Allocation among beneficiaries. (A) The amounts determined under
paragraphs one and two shall be allocated among the beneficiaries (and
including, solely for the purpose of this allocation, among the estate
or trust and resident beneficiaries) in proportion to their respective
shares of federal distributable net income.

(B) The amounts so allocated shall have the same character under this
article as for federal income tax purposes. Where an item entering into
the computation of such amounts is not characterized for federal income
tax purposes, it shall have the same character as if realized directly
from the source from which realized by the estate or trust, or incurred
in the same manner as incurred by the estate or trust.

(b) Alternate methods of determining shares.

(1) If the estate or trust has no federal distributable net income for
the taxable year, the share of each beneficiary (including, solely for
the purpose of this allocation, resident beneficiaries) in the net
amount determined under paragraphs one and two of subsection (a) shall
be in proportion to the beneficiary's share of the estate or trust
income for such year, under local law or the governing instrument, which
is required to be distributed currently and any other amounts of such
income distributed in such year. Any balance of such net amount shall be
allocated to the estate or trust.

(2) The commissioner may by regulation establish such other method or
methods of determining the respective shares of the beneficiaries and of
the estate or trust in its income derived from New York sources, and in
the modifications related thereto, as may be appropriate and equitable.
Such method may be used by the fiduciary in his discretion whenever the
allocation of such respective shares under subsection (a) or paragraph
one of subsection (b) would result in an inequity which is substantial
both in amount and in relation to the total amount of the modifications
referred to in paragraph two of subsection (a).