[§235-123]  Modification andcharacterization of income.  (a)  The pro rata share of each resident andnonresident shareholder in the income attributable to the State of an Scorporation, for the purposes of section 235-122(c), shall be subject to themodifications to corporate income provided by this chapter.

(b)  The pro rata share of each residentshareholder in the income not attributable to the State of an S corporation,for the purposes of section 235-122(c), shall be subject to the modificationsto individual income provided by this chapter.

(c)  S corporation items taken into account bya shareholder pursuant to section 235-122(c) shall be characterized as thoughreceived or incurred by the corporation and not its shareholder. [L 1990, c 16,pt of §1]