Consider this file:

public class LineBreakCode {

  /**
   * File with list of checkouts.  Set it to /dev/null to suppress reading.
   * Defaults to <code>$HOME/.mvc-checkouts</code>.
   */
  public String checkouts = "~/.mvc-checkouts";
}

The Javadoc comment gets reformatted as:

   * File with list of checkouts. Set it to /dev/null to suppress reading. Defaults to <code>
   * $HOME/.mvc-checkouts</code>.

Note that a line break has been introduced between <code> and the subsequent character, where there was no whitespace before. I think this makes the Javadoc comment harder to read.

Furthermore, the space is not closed up when google-java-format runs again, even if there is an opportunity to do so. If I subsequently add a few words to the first line of the reformatted comment:

   * File with list of checkouts. You can set it to /dev/null to suppress reading. Defaults to <code>
   * $HOME/.mvc-checkouts</code>.

and re-run google-java-format, then the result is:

   * File with list of checkouts. You can set it to /dev/null to suppress reading. Defaults to
   * <code>
   * $HOME/.mvc-checkouts</code>.

which carefully preserves the undesired line break that google-java-format added.

I should note that all versions of this look the same in the generated HTML API documentation, so my concern is to avoid unnecessarily munging the source code.

I think the best solution would be for google-java-format to not introduce whitespace immediately after a formatting tag such as <code>.

I have attached files that reproduce the behavior described above.
linebreakcode.zip