In the case of Burnet, Commissioner of Internal Revenue v. Aluminum Goods Manufacturing Co., 1932, the U.S Supreme Court ruled on a tax dispute between the Aluminum Goods Manufacturing Company and Guy T. Helvering (then known as David H. Blair), who was serving as Commissioner of Internal Revenue at that time. The company had claimed deductions for losses incurred during its reorganization in 1916 under Section 234(a)(4) of the Revenue Act of 1918 which allowed for deduction from gross income due to losses sustained during taxable years prior to enactment but disallowed if compensated by insurance or otherwise. However, it was found that these claims were made after a statutory period limiting such claims had expired; hence they were denied by both lower courts and affirmed by Supreme Court's decision stating that statutes imposing limitations upon recovery are conditions precedent to right given taxpayers to recover excessive taxes paid.

In the dissenting opinion for Burnet v. Aluminum Goods Manufacturing Co., Justice Stone argued that the majority's decision was inconsistent with previous rulings and principles of tax law. He contended that a taxpayer should not be allowed to deduct losses from their income unless they can demonstrate an actual economic loss during the taxable year in question. In this case, he believed that Aluminum Goods had failed to show such a loss because it still held onto its stock despite fluctuations in market value. According to Justice Stone, allowing deductions based on unrealized decreases in stock value would open up possibilities for manipulation and abuse of tax laws by savvy taxpayers who could strategically time their sales and purchases of stocks to maximize deductions while minimizing actual economic losses. Furthermore, he pointed out inconsistencies between this ruling and earlier decisions which denied deductions for unrealized depreciation but allowed them for realized capital gains or losses only upon sale or exchange of property.