A landlord leases property upon which the tenant makes improvements.The improvements are significant and are not made in lieu of rent.At the end of the lease,the value of the improvements are not income to the landlord.This rule is an example of:

Question

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The wherewithal to pay concept suggests that income should be recognized when the taxpayer has the means to pay the tax. In this case, the landlord does not have the wherewithal to pay tax on the improvements made by the tenant, as they do not receive any immediate economic benefit or cash flow from them.

A Landlord Leases Property Upon Which the Tenant Makes Improvements