ARE LEASEHOLD IMPROVEMENTS TAXABLE INCOME?
This article tries to find a answer as to whether leasehold improvements are taxable income in the U.S. The Treasury Department has said yes. The lower courts have said no. The issue has not yet been decided by the U.S. Supreme Court. The U.S. Supreme Court attempt to uphold a tax on leasehold improvements will be hampered by its severance theory, that the income must be "something of exchangeable value proceeding from the property, severed from the capital, and coming in, being 'derived,' that is, received or drawn by the recipient for his separate use, benefit, and disposal." An improvement to land, either at the time title to the improvement passes to the lessor subject to the lease, or on reversion by default or any other cause is not exchangeable except as attached to the land. Even the relation of embryo and prospective parent does not obtain to give color to the claim of income in process of realization. The improvement will never be severed from the land except as salvaged material not a part of the growth process.
- DOI
- 10.2308/tar-7061400
- Volume
- 14 (2)
- Pages
- 147-150
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref