In the 1932 case of Burnet, Commissioner of Internal Revenue v. Brooks et al., Executor, the United States Supreme Court ruled on a matter concerning federal income tax law. The issue at hand was whether or not an individual could claim a loss deduction for stock that had become worthless during the taxable year but was not sold or exchanged by the taxpayer. The court held that under Section 23(e)(2) of the Revenue Act of 1928, taxpayers were allowed to deduct losses from sales or exchanges only and did not extend this provision to cover securities which became completely worthless within a given tax year without being sold or exchanged. This decision clarified how "losses" should be interpreted in relation to federal income taxation.

In the dissenting opinion for Burnet v. Brooks, Justice Stone argued that the majority's decision was inconsistent with previous rulings of the court and a misinterpretation of tax law. He contended that there should be no distinction between an estate in expectancy and any other property right when it comes to taxation. The fact that Mrs. Brooks did not receive her inheritance until after her husband's death does not mean she had no vested interest in it during his lifetime; therefore, he believed it should have been taxed as part of their joint income while he was alive. Furthermore, Justice Stone pointed out inconsistencies within the majority’s reasoning itself - if they were correct in saying Mrs.Brooks' inheritance could only be taxed once received because its value might fluctuate or disappear entirely before then, why would this logic not also apply to stock dividends? In conclusion, Justice Stone felt strongly that both precedent and sound legal interpretation supported taxing such inheritances at their time of vesting rather than receipt.