In the case of Richbourg Motor Company v. United States, 1929, the Supreme Court ruled on a dispute involving tax deductions for losses incurred by an automobile dealership during World War I. The Richbourg Motor Company had purchased vehicles from manufacturers with a contractual agreement that allowed them to return unsold cars and receive credit towards future purchases. However, due to wartime restrictions on steel use, car production was halted and the company could not return or sell their remaining inventory leading to financial loss. They sought to deduct this loss from their income taxes but were denied by the Commissioner of Internal Revenue who argued that no actual loss occurred since they held physical assets (the unsold cars). The Supreme Court sided with the government stating that until those automobiles are sold or disposed of in some manner so as it becomes impossible for taxpayer ever again under any circumstances to derive benefit therefrom then only can such goods be said 'to become worthless' within meaning of statute allowing deduction from gross income.

In the dissenting opinion for Richbourg Motor Company v. United States, Justice Stone argued that the majority's interpretation of Section 213(b) of the Revenue Act was incorrect. He believed that this section did not impose a tax on all sales made by an automobile dealer during a taxable year but only those sales which were part of its inventory at the beginning or end of such year. According to him, if Congress intended to levy taxes on all car sales regardless of whether they were in stock at any time within a given fiscal period, it would have explicitly stated so in clear terms rather than leaving it open-ended and ambiguous as interpreted by his colleagues. Furthermore, he contended that taxing every sale without considering when cars entered or left inventory could lead to unfair results where dealers are taxed more heavily simply because they sell their vehicles faster even though their overall profits might be less compared with slower-selling competitors.