In Burnet v. Wells, the U.S. Supreme Court ruled on a tax dispute in 1932. The case revolved around whether or not stock dividends could be considered income for taxation purposes under the Revenue Act of 1916 and if so, when they should be taxed - at their value upon receipt or later when sold for profit? Mr. Wells had received such dividends in 1917 but did not sell them until years later, during which time their value significantly increased due to market fluctuations. The court held that these dividends were indeed taxable as income under the law and should have been reported as such by Mr. Wells in his annual return for that year (1917). Furthermore, it was decided that they should be taxed based on their fair market value at the time of receipt rather than any subsequent increase in worth from selling them later on. This decision clarified how stock dividends are treated within federal tax laws and set an important precedent regarding timing issues related to reporting this type of income.

In the dissenting opinion for Burnet, Commissioner of Internal Revenue v. Wells (1932), Justice Stone argued that the majority's decision was inconsistent with previous rulings and principles of tax law. He contended that a taxpayer should be allowed to deduct losses from their gross income in the year they are discovered and ascertained, rather than when they occurred. This approach would reflect actual economic realities more accurately by acknowledging that some losses may not be immediately apparent or quantifiable. Furthermore, he criticized the majority's reliance on an overly literal interpretation of statutory language at odds with its intended purpose – to provide relief for genuine financial loss within a reasonable timeframe after it is identified.