In the case of Burnet, Commissioner of Internal Revenue v. Thompson Oil & Gas Company in 1930, the U.S Supreme Court ruled on a dispute regarding tax deductions for depletion and depreciation. The Thompson Oil & Gas Company had claimed these deductions based on their oil and gas properties' value at discovery time rather than their cost to acquire or develop them. However, the Commissioner of Internal Revenue denied these claims arguing that such deductions should be based on capital invested (cost), not potential income (value). The court sided with the commissioner's interpretation stating that allowing companies to claim depletion and depreciation based upon discovery values would result in excessive allowances not intended by Congress when they enacted relevant tax laws. Therefore, it was held that deduction for depletion must be calculated from actual investment costs instead of speculative future profits.

In the dissenting opinion for Burnet, Commissioner of Internal Revenue v. Thompson Oil & Gas Company, Justice Stone argued that the majority's interpretation of tax law was incorrect and overly rigid. He contended that a taxpayer should be allowed to deduct losses from their gross income in any year where it is ascertained with reasonable certainty that such losses have occurred, even if they were not discovered until later years. According to him, this approach would better reflect economic realities and align more closely with congressional intent behind the relevant statutes. Furthermore, he criticized the majority's reliance on technicalities rather than focusing on principles underlying taxation laws which aim at taxing net income accurately over time.