In the case of Fred T. Ley & Company Inc. v. United States, 1926, the U.S Supreme Court ruled on a matter concerning federal tax law and its application to corporations involved in construction contracts spanning multiple years. The court held that income derived from such long-term contracts could not be recognized for taxation purposes until completion of the contract rather than annually as work progressed (the "completed contract method"). This was contrary to what had been asserted by the Bureau of Internal Revenue which sought to tax portions of income each year under an "annual accounting" principle (the “percentage-of-completion” method). The decision established important precedent regarding when revenue is recognized for tax purposes in multi-year projects.

In the dissenting opinion for Fred T. Ley & Company Inc. v. United States, Justice Stone argued that the majority's interpretation of the Revenue Act was incorrect and inconsistent with its legislative history and purpose. He contended that Congress intended to tax only those profits derived from property sales during wartime price inflation, not all profits made during this period regardless of their source or nature as interpreted by the majority ruling. Furthermore, he disagreed with how they calculated "inventories" in determining taxable income under Section 202(a), arguing it should be based on actual cost rather than market value at year-end which could result in double taxation if prices fell after inventory valuation but before sale completion - a situation not contemplated nor intended by Congress when drafting this law according to him.