TAXATION - INCOME TAX - IMPROVEMENTS MADE BY LESSEE AS INCOME TO LESSOR

The recent decision of the Supreme Court of the United States in M. E. Blatt Co. v. United States has fairly settled the conflict that has ranged for over twenty years between the Commissioner of Internal Revenue and the Board of Tax Appeals on one side, and the courts on the other. The commissioner's contention that improvements made by a lessee should be taxed as income to the lessor was denied, and by dictum the Court approved the reasoning of Judge Learned Hand in Hewitt Realty Co. v. Commissioner, wherein he said that the judicial concept of "income" did not include improvements erected by a lessee. Justice Stone concurred in the result but did not join in the opinion on the point of whether or not such improvements would be taxable if they resulted in an increase in the market value of the lessor's land in the tax year.