Tenant Deducted Rent as S Corporation Expense

Landlord sued to evict rent-stabilized tenant for nonprimary residence. Landlord asked the court to rule in its favor without a trial, based on documentary evidence. The court ruled against landlord, who appealed and won. On her federal income tax returns for the years 2009, 2010, and 2011, tenant deducted the entire rent for the apartment as an expense of her S corporation. The instructions for filing returns for S corporations disallow the deduction of rent “for a dwelling unit occupied by any shareholder for personal use.” Tenant’s position that the apartment was her primary residence therefore was contrary to declarations made under penalty of perjury on income tax returns that she didn’t occupy the apartment for personal use. It didn’t matter that Rent Stabilization Code Section 2520.6(u) stated that “no single factor” was solely determinative in a primary residence case. Tenant’s claim was logically incompatible with the position she asserted on her tax returns.

Ansonia Associates Limited Partnership v. Unwin: 130 A.D.3d 453, 2015 NY Slip Op 05880 (App. Div. 1 Dept.; 7/7/15; Friedman, JP, Andrias, Saxe, Richter, Gische, JJ)