Mayoral frontrunner Eric Adams contends that in 2007 he gave away his shares in a Brooklyn co-op to a woman who co-owned the apartment with him.
At the time, he would have been required to file a gift tax report about the transfers of his stake in the property — a Prospect Heights apartment then worth more than $300,000.
But his campaign did not respond to multiple requests over the last week to produce evidence of such a filing — prompting his mayoral opponent Maya Wiley to declare Thursday: “It’s time we got answers from Eric Adams.”
And while Adams this week blamed his friend for not disclosing the shares transfer to the co-op board until “recently,” THE CITY has learned that she’s now the board’s president.
The gift tax issue is just one of the unanswered questions surrounding Adams’ ownership of the one-bedroom, 550-square-foot unit on a tree-lined street a few blocks away from Grand Army Plaza.
Adams purchased the Prospect Place apartment in 1992 with Sylvia Cowan, who recently described the two as “good friends.”
Though state and city disclosure requirements mandate candidates and elected officials must disclose ownership of any property co-owned with a non-relative, THE CITY reported that Adams never listed the existence of the co-op on either his state Senate or borough president disclosure forms starting in 2005.
Adams’ campaign told THE CITY he’d given away his shares in the unit to Cowan 14 years ago.
He produced a photocopy of a one-page, non-notarized letter he says he wrote to Cowan on Feb. 9, 2007 stipulating that he would “assign” his shares to her “without asking for any payment for my portion of the shares.” The transfer was to take place March 1, 2007.
The building’s co-op board was supposed to be notified of this transfer at the time. Co-op boards can reject the transaction if they have issues with the owner who assumes 100% of the shares — and 100% of the responsibility for making maintenance payments each month.
A 14-Year Lag
But in a statement from Cowan provided to THE CITY by Adams’ campaign, she conceded the co-op board was not notified at the time Adams says she received his shares. She said she “just recently updated the co-op board at the building about the apartment’s ownership status.”
That would put the notification to the board at 14 years after the alleged transfer. THE CITY wasn’t immediately able to reach co-op owners who were members of the board at that time.
Cowan, now Prospect Place co-op board’s president, declined comment via text Thursday night after failing to respond to multiple emails and calls this week. She currently lives on the 21st floor of a Fort Lee co-op where Adams co-owns a unit on the 22nd floor with his girlfriend, Tracey Collins.
In a Wednesday interview with THE CITY, Adams blamed Cowan for not letting the board know about the ownership change at the time of the alleged transaction, stating, “I turned (the shares) over to her. It’s her responsibility and obligation to notify the board.”
Eliot Zuckerman, a Manhattan attorney who specializes in real estate, would not comment on Adams’ situation with the Prospect Place co-op. But speaking generally, Zuckerman noted if such a transaction took place where something of great value was given to another individual with no payment in return, the IRS must be notified.
“If two people own anything — real property or otherwise — unless the spousal exemption applies, if one of them conveys interest to the other for no (financial) consideration, it’s deemed to be a gift and a gift tax return should be filed,” he said.
The giver of any gift worth more than $15,000 must report the gift to the IRS because a taxpayer’s giving accumulates over a lifetime and eventually reaches a cap where the gift becomes taxable. Not reporting a gift potentially delays the moment when the cap is reached and taxation kicks in.
Zuckerman said the value of the gift would be based on the market value of the unit at the time of the transfer.
Between 2005 and 2008, first-floor units of a similar size in the building were selling for between $319,000 and $345,000, according to sales records presented on Streeteasy. Adams’ half was likely worth somewhere north of $150,000.
Evan Thies, a spokesperson for Adams’ campaign, did not respond to THE CITY’s multiple questions about whether the Democratic mayoral hopeful filed the required gift tax return regarding Prospect Place share transfer. He provided no documentation that such a report was filed with the IRS.
After THE CITY’s report on whether Adams filed a gift tax form, Wiley said her rival’s handling of his personal finances raises questions about whether he can manage a nearly $100 billion annual city budget.
“I am shocked to hear Eric Adams once again failed to take responsibility for not reporting, as far as we can tell, on a gift tax for the transfer of a gift in his shares,” Wiley said during a news conference on the Upper West Side.
“And the reason this matters is because the people of the city of New York deserve to know whether your mayor knows how to transfer property interests.”
Wiley also cited reporting that Adams didn’t include rental income from a different property — a four-family townhouse in Bedford-Stuyvesant — on his federal tax filings.
“Have you engaged in tax fraud or have you stayed on the right side of the law?” she asked.
In city financial disclosure forms, Adams has declared earning upwards of $50,000 in annual rent from the Lafayette Avenue property. But he reported zero taxable rental income in 2017, 2018 and 2019 due to what he says were expensive repairs that offset the revenue.
During those years, however, he did not file a document known as Schedule E that is required by the IRS. The document spells out the amount of rental income and the amount spent on upkeep. Adams’ campaign has promised to amend his filings but has yet to do so, and this week told THE CITY he had no record of his 2015 and 2016 tax filings on hand.
Wiley said the revelations come “on top of story after story after story where Eric Adams either doesn’t remember facts that it’s surprising to not remember, or can’t account and prove something he has said in terms of his personal business, his ownership in property and his reporting on tax returns.”
In a statement released late Thursday, Adams’ campaign did not address whether he filed the required gift tax forms. The campaign said that he had shared personal financial information “again and again” through mandatory public disclosures, and suggested he recently learned he could save money on his taxes by filing amended returns.
“Eric is a blue collar New Yorker who earns his income mainly from a police pension and his job — and he’s not as wealthy as other people running for mayor, who may have highly paid professionals helping them use the tax code to their advantage,” the statement said.
This article was originally posted on Adams Dodges Gift Tax Questions on Brooklyn Co-op He Says He Gave Away to Friend