In the case of Burnet, Commissioner of Internal Revenue v. Sanford & Brooks Company in 1930, the U.S Supreme Court ruled on a matter concerning federal income tax law. The dispute arose when Sanford & Brooks Company claimed deductions for losses incurred during World War I as a result of contracts that were cancelled by the government. The company argued that these losses should be considered as having been sustained in 1918 and therefore deductible from their taxes for that year under applicable revenue laws at the time. However, they had not discovered or computed these losses until after filing their return for 1918. The court held against Sanford & Brooks Company's claim stating that "a loss is suffered within meaning of this section only when its amount is evidenced with reasonable certainty." They further clarified that it was necessary to ascertain such loss within taxable year before deduction could be made therefrom under Revenue Act Sept. 8, 1916. Therefore, since Sanford & Brooks did not discover or compute their loss until after filing their return for 1918 - which was beyond the taxable year - they were unable to deduct those amounts from their taxes.

In the dissenting opinion for Burnet v. Sanford & Brooks Company, Justice Stone argued that the majority's decision was inconsistent with previous rulings and principles of tax law. He contended that allowing a taxpayer to claim deductions in one year based on losses incurred in another year undermined the annual accounting period principle fundamental to federal income taxation. This principle holds each tax year as a separate unit for calculating income and liability, preventing taxpayers from offsetting gains or losses across different years. Justice Stone also pointed out that Congress had already provided relief measures for businesses suffering heavy losses through provisions like loss carryovers and carrybacks but these were not applicable here because they hadn't been enacted at the time of this case's relevant transactions. Therefore, he believed it was inappropriate for courts to create similar remedies by judicial interpretation when such matters should be left up to legislative discretion.