In the case of Burnet, Commissioner of Internal Revenue v. Chicago Portrait Co., 1931, the U.S Supreme Court was tasked with deciding whether a corporation could deduct from its gross income an amount paid to another company for services rendered in previous years. The Chicago Portrait Company had entered into contracts with other companies that provided them with customer leads and sales support. These contracts required upfront payments which were then deducted from their annual tax returns over several years as business expenses. However, the Commissioner of Internal Revenue argued these deductions should only be made in the year they were actually paid out. The court ruled in favor of Burnet (the commissioner), stating that under Section 234(a)(2) and Article 23(s)-1 of Regulations No. 65 relating to Income Tax (1924 series), such expenditures are not deductible unless they fall within some exception specified by statute or regulation allowing amortization over a period longer than one year - none applied here. This decision established precedent regarding how businesses can claim deductions for certain types of expenses on their taxes: specifically, it clarified that costs must generally be deducted during the fiscal year when they occur rather than spread out across multiple years.

In the dissenting opinion for Burnet v. Chicago Portrait Co., Justice Stone argued that the majority's interpretation of Section 214(a) of the Revenue Act was incorrect and inconsistent with its legislative history. He believed that Congress intended to allow taxpayers to deduct losses from their gross income in any year where it becomes evident that a debt has become worthless, not just in the year when it first became partially worthless. Furthermore, he disagreed with the majority's view on "ascertaining" worthlessness, arguing instead for a more practical approach which recognizes business realities rather than strict legal procedures or judgments. In his view, this would better align with Congressional intent and provide fairer outcomes for taxpayers.