In the 1930 case of Burnet, Commissioner of Internal Revenue v. Whitehouse, the U.S. Supreme Court ruled on a tax dispute involving capital gains from stock sales. The respondent, Mrs. Whitehouse had sold stocks in two companies and claimed that these were capital assets under Section 208(a) of the Revenue Act of 1921 which would allow her to deduct losses against her income for tax purposes. However, the petitioner argued that these stocks were not capital assets as they constituted part or product of 'property held by taxpayer primarily for sale in course of his trade or business'. The court sided with Mrs.Whitehouse stating that she was an investor rather than a dealer and thus could claim deductions on her losses from selling those stocks as per Section 208(a). This ruling clarified what constitutes a "capital asset" and set precedent for future cases regarding taxation related to investment versus business activities.

In the dissenting opinion for Burnet, Commissioner of Internal Revenue v. Whitehouse, Justice Holmes disagreed with the majority's interpretation of tax law. He argued that a taxpayer should be allowed to deduct losses from their income in the year they occur rather than when they are discovered or realized. In this case, he believed Mrs. Whitehouse should have been able to claim her husband’s estate as a loss in 1918 (the year it was lost due to World War I), not 1920 (when she became aware). According to him, allowing deductions only upon discovery would lead taxpayers into speculative practices and create unnecessary complications for both them and tax authorities alike by forcing them into guessing games about future events' impact on current taxes.