In the case of Burnet, Commissioner of Internal Revenue v. Henry in 1930, the U.S Supreme Court ruled on a dispute regarding income tax deductions. The respondent, Mr. Henry had claimed a deduction for losses incurred from sales of stock during 1921 and 1922 but was denied by the Commissioner of Internal Revenue who argued that these were capital losses rather than ordinary ones as defined by applicable law at that time. The Board of Tax Appeals sided with Mr. Henry while an appellate court affirmed this decision leading to an appeal before the Supreme Court. The key issue revolved around whether or not such losses could be classified as "ordinary" under Section 204(a) and (b)of the Revenue Act which would allow them to be fully deductible against gross income or if they should instead be considered "capital" losses subject to more restrictive rules limiting their deductibility. Ultimately, Justice Holmes delivered a unanimous opinion for the court ruling in favor of Burnet stating that these were indeed capital losses hence only partially deductible according to prevailing laws then governing taxation matters thereby reversing earlier decisions made by lower courts.

In the dissenting opinion for Burnet, Commissioner of Internal Revenue v. Henry (1930), Justice Oliver Wendell Holmes argued that the majority's decision was inconsistent with previous rulings and would create unnecessary confusion in tax law. He disagreed with their interpretation of Section 214(a) of the Revenue Act, which he believed allowed taxpayers to deduct losses from sales or exchanges made during a taxable year regardless if they were capital assets or not. According to him, this provision did not distinguish between different types of property; therefore it should apply equally to all properties sold at a loss within a given year. Furthermore, he criticized the majority's reliance on Eisner v Macomber case as irrelevant because it dealt with income rather than deductions. In his view, there was no need for such differentiation since both are integral parts of determining net income under federal tax laws.