§ 1301-B. City separate tax on the ordinary income portion of lump sum distributions. (a) Imposition of separate tax. The city separate tax on the ordinary income portion of a lump sum distribution imposed pursuant to the authority of this article shall be imposed for each taxable year on the ordinary income portion of a lump sum distribution of every resident individual, estate or trust of such city which has made an election of lump sum treatment under subsection (e) of section four hundred two of the internal revenue code.

(b) Amount of separate tax. The amount of tax imposed pursuant to the authority of subsection (a) for any taxable year shall be an amount equal to five times the tax which would be imposed at the rate set forth in paragraph three of subsection (a) or (b) of section thirteen hundred four of this article, whichever may be applicable, if the recipient were an individual referred to in such subsection and the city taxable income referred to were an amount equal to one-fifth of the excess of:

(1) the total taxable amount of the lump sum distribution for the taxable year, over

(2) the minimum distribution allowance.

(c) Minimum distribution allowance. For purposes of this section, the minimum distribution allowance shall be that which is calculated according to subparagraph (C) of paragraph one of subsection (e) of section four hundred two of the internal revenue code.

(d) Liability for tax. The recipient of a lump sum distribution shall be liable for the tax imposed pursuant to the authority of this section.

(e) Multiple distributions and distributions of annuity contracts. For purposes of this section the rules concerning multiple distributions and distributions of annuity contracts as specified by paragraph two of subsection (e) of section four hundred two of the internal revenue code shall be applicable, except that references to the "tax imposed by paragraph (1) (A)" shall be deemed to be references to the city separate tax on the ordinary income portion of a lump sum distribution authorized by this article, and except that only lump sum distributions (or portions thereof) and distributions of annuity contracts subject to the city separate tax on the ordinary income portion of lump sum distributions authorized by this article shall be included, and except that references to the secretary shall be deemed to be references to the tax commission.

(f) Definitions and special rules. For purposes of this section, the following provisions shall apply, to the extent applicable to the taxpayer's federal tax on lump sum distributions: (1) the definitions and special rules as specified in paragraph four of subsection (e) of section four hundred two of the internal revenue code; and (2) the special rules relating to (A) individuals who have attained the age of fifty before January first, nineteen hundred eighty-six and (B) capital gains, as specified in paragraphs three, four, five and six of subsection (h) of section eleven hundred twenty-two of the tax reform act of nineteen hundred eighty-six as enacted by public law 99-514, but (i) in the event that paragraph three of such subsection is applicable, clause (ii) of subparagraph (B) of such paragraph shall be applied using a rate of one and seventy-two hundredths percent, and (ii) in the event that paragraph five of such subsection is applicable, the words "five" and "one-fifth" in subsection (b) of this section shall be read as "ten" and "one-tenth", respectively, and subsection (b) of this section shall be applied by using the rate of tax specified in subsection (a) of section thirteen hundred four as such subsection was in effect for taxable years beginning in nineteen hundred eighty-six.

(g) Credits. The credits against tax authorized under this article, except for the credit under subsection (a) of section thirteen hundred ten, shall not be allowed against the city separate tax on the ordinary income portion of lump sum distributions imposed pursuant to the authority of this article.