Tenant Who Amended Tax Returns Remains Rent Stabilized

Facts: Landlord applied for high-rent/ high-income deregulation of tenant's rent-stabilized apartment. Tenant answered the application, and the DRA verified with the Department of Taxation and Finance (DTF) that tenant's adjusted household income was greater than $175,000 for 1996 and 1997. The DRA notified tenant and gave tenant a chance to respond further. Tenant said that she had filed amended returns for the two years in question and that her income would now be less than $175,000. DTF records verified this, and the DHCR ruled against landlord. Landlord appealed, claiming that the DHCR's decis- ion was unreasonable. Court: Landlord loses. Landlord claimed that tenant was engaged in income shifting simply to avoid deregulation. But the DHCR couldn't speculate on tenant's actual income. The DHCR had authority to consider tenant's amended tax return information. There was no proof of fraud, illegality, or an irregularity in a vital matter.

Classic Realty LLC v. DHCR: NYLJ, 8/15/03, p. 18, col. 1 (App. Div. 1 Dept.; Tom, JP, Mazzarelli, Sullivan, Williams, Gonzalez, JJ)