Helvering v. Bruun, No. 479

CourtUnited States Supreme Court
Writing for the CourtROBERTS
Citation309 U.S. 461,84 L.Ed. 864,60 S.Ct. 631
PartiesHELVERING, Commissioner of Internal Revenue, v. BRUUN
Docket NumberNo. 479
Decision Date25 March 1940

309 U.S. 461
60 S.Ct. 631
84 L.Ed. 864
HELVERING, Commissioner of Internal Revenue,

v.

BRUUN.

No. 479.
Argued Feb. 28, 1940.
Decided March 25, 1940.

Page 462

Messrs. Robert H. Jackson, Atty. Gen., and Arnold Raum, of Washington, D.C., for petitioner.

Mr. John H. McEvers, of Kansas City, Mo., for respondent.

[Argument of Counsel from pages 462-463 intentionally omitted]

Page 464

Mr. Justice ROBERTS delivered the opinion of the Court.

The controversy had its origin in the petitioner's assertion that the respondent realized taxable gain from the forfeiture of a leasehold, the tenant having erected a new building upon the premises. The court below held that no income had been realized.1 Inconsistency of the decisions on the subject led us to grant certiorari. 308 U.S. 544, 60 S.Ct. 180, 84 L.Ed. —-.

The Board of Tax Appeals made no independent findings. The cause was submitted upon a stipulation of facts. From this it appears that on July 1, 1915, the respondent, as owner, leased a lot of land and the building thereon for a term of ninety-nine years.

The lease provided that the lessee might, at any time, upon giving bond to secure rentals accruing in the two ensuing years, remove or tear down any building on the land, provided that no building should be removed or torn down after the lease became forfeited, or during the last three and one-half years of the term. The lessee was to surrender the land, upon termination of the lease, with all buildings and improvements thereon.

In 1929 the tenant demolished and removed the existing building and constructed a new one which had a useful life of not more than fifty years. July 1, 1933, the lease was cancelled for default in payment of rent and taxes and the respondent regained possession of the land and building.

The parties stipulated 'that as at said date, July 1, 1933, the building which had been erected upon said premises by the lessee had a fair market value of $64,245.68 and that the unamortized cost of the old building, which was removed from the premises in 1929 to make way for the new building, was $12,811.43, thus leaving a net fair market value as at July 1, 1933, of $51,434.25, for

Page 465

the aforesaid new building erected upon the premises by the lessee.'

On the basis of these facts, the petitioner determined that in 1933 the respondent realized a net gain of $51,434.25. The Board overruled his determination and the Circuit Court of Appeals affirmed the Board's decision.

The course of administrative practice and judicial decision in respect of the question presented has not been uniform. In 1917 the Treasury ruled that the adjusted value of improvements installed upon leased premises is income to the lessor upon the termination of the lease.2 The ruling was incorporated in two succeeding editions of the Treasury Regulations.3 In 1919 the Circuit Court of Appeals for the Ninth Circuit held in Miller v. Gearin, 258 F. 225, that the regulation was invalid as the gain, if taxable at all, must be taxed as of the year when the improvements were completed.4

The regulations were accordingly amended to impose a tax upon the gain in the year of completion of the improvements, measured by their anticipated value at the termination of the lease and discounted for the duration of the lease. Subsequently the regulations permitted the lessor to spread the depreciated value of the improvements over the remaining life of the lease, reporting an aliquot part each year, with provision that, upon premature termination, a tax should be imposed upon the excess of the then value of the improvements over the amount theretofore returned.5

In 1935 the Circuit Court of Appeals for the Second Circuit decided in Hewitt Realty Co. v. Commissioner,

Page 466

76 F.2d 880, 98 A.L.R. 1201, that a landlord received no taxable income in a year, during the term of the lease, in which his tenant erected a building on the leased land. The court, while recognizing that the lessor need not receive money to be taxable, based its decision that no taxable gain was realized in that case on the fact that the improvement was not portable or detachable from the land, and if removed would be worthless except as bricks, iron, and mortar. It said, 76 F.2d at page 884: 'The question as we view it is whether the value received is embodied in something separately disposable, or whether it is so merged in the land as to become financially a part of it, something which, though it increases its value, has no value of its own when torn away.'

This decision invalidated the regulations then in force.6

In 1938 this court decided M. E. Blatt Co. v. United States, 305 U.S. 267, 59 S.Ct. 186, 83 L.Ed. 167. There, in connection with the...

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113 practice notes
  • Title Ins. Co. of Minnesota v. State Bd. of Equalization, No. A045664
    • United States
    • California Court of Appeals
    • June 24, 1991
    ...98 S.Ct. at 325; Commissioner v. Glenshaw Glass Co., supra, 348 U.S. at pp. 430-431, 75 S.Ct. at pp. 476-477; Helvering v. Bruun (1940) 309 U.S. 461, 468-469, 60 S.Ct. 631, 634-635, 84 L.Ed. At present, income is generally equated with "undeniable accessions to wealth, clearly realized, and......
  • Doll v. Commissioner of Internal Revenue, No. 12773.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • May 11, 1945
    ...318 U.S. 322, 329, 63 S.Ct. 577, 87 L. Ed. 785; Helvering v. Stuart, 317 U.S. 154, 169, 63 S.Ct. 140, 87 L.Ed. 154; Helvering v. Bruun, 309 U.S. 461, 468, 60 S.Ct. 631, 84 L.Ed. 864; Helvering v. Wood, 309 U.S. 344, 347, 60 S.Ct. 551, 84 L.Ed. 796; Douglas v. Willcuts, 296 U.S. 1, 9, 56 S.C......
  • Murphy v. Internal Revenue Service, No. 05-5139.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • July 3, 2007
    ...429, 432 n. 11, 75 S.Ct. 473 (quoting H.R.Rep. No. 83-1337, at A18 (1954), reprinted in 1954 U.S.C.C.A.N. 4017, 4155); Helvering v. Bruun, 309 U.S. 461, 468, 60 S.Ct. 631, 84 L.Ed. 864 Murphy argues her award is not a gain or an accession to wealth and therefore not part of gross income. No......
  • Hirst v. C. I. R., No. 75-1543
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • January 4, 1978
    ...310. Old Colony Trust Co. v. Commissioner of Internal Revenue, 279 U.S. 716, 729, 49 S.Ct. 499, 73 L.Ed. 918 (1929); Helvering v. Bruun, 309 U.S. 461, 469, 60 S.Ct. 631, 84 L.Ed. 864 (1940); Wall v. United States, 164 F.2d 462, 466 (4 Cir. 1947); Reg. 1.61-14(a). Cf. Douglas v. Willcuts, 29......
  • Request a trial to view additional results
113 cases
  • Title Ins. Co. of Minnesota v. State Bd. of Equalization, No. A045664
    • United States
    • California Court of Appeals
    • June 24, 1991
    ...98 S.Ct. at 325; Commissioner v. Glenshaw Glass Co., supra, 348 U.S. at pp. 430-431, 75 S.Ct. at pp. 476-477; Helvering v. Bruun (1940) 309 U.S. 461, 468-469, 60 S.Ct. 631, 634-635, 84 L.Ed. At present, income is generally equated with "undeniable accessions to wealth, clearly realized, and......
  • Doll v. Commissioner of Internal Revenue, No. 12773.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (8th Circuit)
    • May 11, 1945
    ...318 U.S. 322, 329, 63 S.Ct. 577, 87 L. Ed. 785; Helvering v. Stuart, 317 U.S. 154, 169, 63 S.Ct. 140, 87 L.Ed. 154; Helvering v. Bruun, 309 U.S. 461, 468, 60 S.Ct. 631, 84 L.Ed. 864; Helvering v. Wood, 309 U.S. 344, 347, 60 S.Ct. 551, 84 L.Ed. 796; Douglas v. Willcuts, 296 U.S. 1, 9, 56 S.C......
  • Murphy v. Internal Revenue Service, No. 05-5139.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • July 3, 2007
    ...429, 432 n. 11, 75 S.Ct. 473 (quoting H.R.Rep. No. 83-1337, at A18 (1954), reprinted in 1954 U.S.C.C.A.N. 4017, 4155); Helvering v. Bruun, 309 U.S. 461, 468, 60 S.Ct. 631, 84 L.Ed. 864 Murphy argues her award is not a gain or an accession to wealth and therefore not part of gross income. No......
  • Hirst v. C. I. R., No. 75-1543
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • January 4, 1978
    ...310. Old Colony Trust Co. v. Commissioner of Internal Revenue, 279 U.S. 716, 729, 49 S.Ct. 499, 73 L.Ed. 918 (1929); Helvering v. Bruun, 309 U.S. 461, 469, 60 S.Ct. 631, 84 L.Ed. 864 (1940); Wall v. United States, 164 F.2d 462, 466 (4 Cir. 1947); Reg. 1.61-14(a). Cf. Douglas v. Willcuts, 29......
  • Request a trial to view additional results

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