§ 30-07 Commercial Rent Tax Base Rent Reduction.
RCNY § 30-07
(a)For each particular eligible premises occupied by a tenant which has obtained the certification required by 19 RCNY § 30-02, base rent shall be reduced by an amount determined by multiplying such base rent by a fraction, the numerator of which is the number of eligible aggregate employment shares maintained by such tenant at such eligible premises in the tax year for which the reduction is claimed and the denominator of which is a number equal to the number of aggregate employment shares maintained by such tenant in such eligible premises in such tax year, provided that the denominator shall not exceed the highest number of aggregate employment shares maintained by such eligible tenant in such eligible premises in the tax year during which such tenant relocates to such eligible premises and in each of the three immediately succeeding tax years.
(b)For purposes of calculating eligible aggregate employment shares as specified in 19 RCNY § 30-01 "Aggregate employment shares" (1), aggregate employment shares in the eligible area and eligible premises for the tax year for which reduction is claimed shall be determined on the basis of the commercial rent tax annual reporting period; however, the aggregate employment shares within the eligible area, within the eligible premises and outside the eligible area for the year prior to relocation shall be calculated on the basis of the taxpayer's taxable year for the general corporation tax, unincorporated business tax or banking corporation tax (whichever is applicable) immediately preceding the taxable year of the relocation to the eligible area or the eligible premises in question.
(c)Base rent may be reduced as provided in this section for the tax year during which the tenant relocates to eligible premises and for any of the eleven immediately succeeding tax years during which the tenant maintains eligible aggregate employment shares with respect to such eligible premises, provided, however, that there shall be no reduction with respect to base rent for any part of the tax year preceding the date of relocation to such eligible premises. Example 1: X, a calendar year taxpayer, relocated to eligible premises on June 1, 1989 and received the certifications required by 19 RCNY § 30-02. X's annual rent for the eligible premises is $100,000. During 1988, X had 100 employees at the eligible premises and another 100 employees at another premises in Manhattan south of 96th Street. On June 1, 1989 (the date of the relocation), X moved all 100 employees from Manhattan to the eligible premises. The fraction by which base rent is reduced in the tax year June 1, 1989 to May 31, 1990, is computed as follows: (Assume that the tax year has exactly 52 weeks, that each quarter has exactly 13 weeks, and that all employees work full time during the entire tax year.) The numerator of the fraction is the number of eligible aggregate employment shares in the eligible premises. The number of eligible aggregate employment shares is the number of aggregate employment shares in the area in the tax year in question less the number of aggregate employment shares in the eligible area in the taxable year preceding the taxable year of relocation (subject to limitations). During the commercial rent tax year June 1, 1989 to May 31, 1990, X maintained 200 employees at the eligible premises, each of whom worked 52 weeks. The number of aggregate employment shares for the tax year is 200 (200 employees times 52 weeks worked by each employee, divided by 52 weeks). During calendar year 1988 (the taxable year preceding the taxable year of relocation), X maintained 100 employees at the eligible premises, each of whom worked 52 weeks. The number of aggregate employment shares for 1988 is 100 (100 employees × 52/52). The numerator of the fraction (the number of aggregate employment shares) is 100 (200 shares in the current year, less 100 shares in 1988). The denominator (the number of aggregate employment shares in the eligible premises in the tax year) is 200. The percentage reduction is 100/200 = 50%. Since base rent prior to the deduction was $100,000 the deduction is $50,000 ($100,000 times 50%). Example 2: Assume the same facts as in example 1, except that the relocation takes place on September 1, 1989. There are 100 employees in the eligible premises for the entire tax year and 100 additional employees in the eligible premises for 39 weeks of the tax year (September 1, 1989 through May 31, 1990). Aggregate employment shares for the tax year thus equals 175. ((100 × 52) (100 × 39))/52.) The numerator of the fraction by which base rent is reduced is 75 (175 shares in the current year, less 100 shares in 1988). The denominator is 175.The percentage reduction is 75/175 = 42.86%. Since X relocated on September 1, this percentage is applied only to the base rent attributable to the portion of the tax year following relocation, or $75,000. The reduction is equal to 42.86% of $75,000, or $32,145. Thus, taxpayer's base rent for the tax year June 1, 1989 through May 31, 1990, is $100,000 less $32,145, or $67,855.
