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There's no concrete guidance, such as a form I can point you to from the IRS which explicitly states that this is a capital asset, however the general consensus is that a lease buyout such as this is treated as capital gains.
Under present law, a rent stabilized tenant is able to renew his/her lease indefinitely as long as they are in compliance with lease terms, because of this, the entitlement is considered a property right, which is a capital asset.
Martin B Miller, a Manhattan tax lawyer, agrees with this position.
You can read more about this, HERE
Your basis in this asset is 0, because you did not pay upfront for this property right.
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Does the State view it the same way as the IRS would
Yes, the state would view it the same way
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