Helvering v. Bruun

Charles Bruun (plaintiff) leased land with an old building for 99 years; the tenant could make improvements, which would revert to Bruun if the lease was cancelled for the tenant's fault. The tenant replaced the old building with a new one, then defaulted on rent and taxes. Bruun regained the property, now worth about $50,000 more than before. The Commissioner (defendant) assessed a deficiency for Bruun's failure to report that gain as income.

Whether a landlord realizes a taxable gain from a tenant's improvements to the land upon expiration or termination of the lease.