In the case of Burnet, Commissioner of Internal Revenue v. Leininger (1931), the U.S Supreme Court ruled on a matter concerning federal income tax law. The dispute arose when Mr. Leininger claimed deductions for losses incurred from sales of stock in his 1920 and 1921 tax returns, which were disallowed by the Commissioner of Internal Revenue leading to additional assessments against him. Upon challenging these assessments, lower courts sided with Mr. Leiningen stating that he was entitled to those deductions under applicable revenue acts at that time. However, upon reaching the Supreme Court, it reversed this decision arguing that such losses could only be deducted if they were sustained during taxable years and not merely because they had been ascertained and charged off within those years as contended by Mr.Leininger's interpretation of relevant statutes.The court held that a loss is deductible only in the year in which it occurs regardless whether or not it has been charged off within a particular year.This ruling clarified how "losses" should be interpreted under federal income tax laws.

In the dissenting opinion for Burnet, Commissioner of Internal Revenue v. Leininger, Justice Stone argued that the majority's decision was inconsistent with previous rulings and principles of tax law. He contended that the taxpayer should be allowed to deduct losses from his income in the year they were realized or discovered, rather than when they actually occurred. In this case, he believed that Mr. Leininger should have been able to claim a loss on his 1921 taxes due to worthless securities even though their value had declined over several years prior because it was not until 1921 that he became aware of their worthlessness. The justice also expressed concern about potential unfairness and complexity resulting from requiring taxpayers to retroactively amend returns for past years whenever a loss is discovered.