is "realized" for taxation purposes, realization does not require that the economic gain be in "cash derived from the sale of an asset". Realization can also arise from property exchange; relief of indebtedness; or other transactions yielding profit—e.g. by receiving an asset with enhanced value in a transaction, even where severance does not occur (i.e. even where "the gain is a portion of the value of property received by the taxpayer in the transaction"). Subsequent legislation Congress nullified the effect of section 22 of the Revenue Act of 1932 (as interpreted by the Court in Bruun) by enacting the Revenue Act of 1942, section 115 of which included an amendment of section 22 of the Internal Revenue Code of 1939. The effect of that amendment to the 1939 Code was carried forward in sections 109 and 1019 of the Internal Revenue Code of 1954 (now the Internal Revenue Code of 1986). Section 109 excludes, from a lessor's income, the value of leasehold improvements realized on termination of a lease. Section 1019 denies the lessor a step-up in basis for the income so excluded. These provisions overrule the proposition announced in Bruun, that repossession of an asset with an enhanced value from a transaction with another party results in recognition of gross income. The aim of the Revenue Act of 1942 was to relieve lessors—suddenly confronted with large tax obligations—of the need to raise cash in a hurry, at a time when the real estate market was scraping bottom. An inadvertent side effect of the means chosen—permitting current income to be deferred to later period—was to reduce the lessor's tax obligation absolutely, by postponing his realization of any improvements to the sale of the property. Academic commentary See also List of United States Supreme Court cases, volume 309 Cottage Savings Ass'n v. Commissioner References Further reading External links 1940 in United States case law United States Supreme Court cases United States Supreme Court cases of the Hughes Court United States taxation and revenue case law