INTRODUCTION TO TAX SCHOOL
Top 100 Cases
U.S. v. Lewis, 340 U.S. 590 (1951).
Edited Case
Top 100 Cases List
Unedited Case
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
Slides List
Top 33 Doctrine List
1
U.S. v. Lewis, 340 U.S. 590 (1951).
Caution: The result in this
case is unfair to the taxpayer.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
2
U.S. v. Lewis, 340 U.S. 590 (1951).
Caution: The result in this
case is unfair to the taxpayer.
The Supreme Court, however,
strictly applied the law, as enacted
by Congress.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
3
U.S. v. Lewis, 340 U.S. 590 (1951).
Caution: The result in this
case is unfair to the taxpayer.
The Supreme Court, however,
strictly applied the law, as enacted
by Congress.
Justice Douglas, in dissent, termed
the result “unconscionable.”
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
4
U.S. v. Lewis, 340 U.S. 590 (1951).
Caution: The result in this
case is unfair to the taxpayer.
The Supreme Court, however,
strictly applied the law, as enacted
by Congress.
Justice Douglas, in dissent, termed
the result “unconscionable.”
As a result, Congress
enacted Section 1341,
which changes the result
in many future similar
cases.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
5
U.S. v. Lewis, 340 U.S. 590 (1951).
Caution: The result in this
case is unfair to the taxpayer.
The Supreme Court, however,
strictly applied the law, as enacted
by Congress.
Justice Douglas, in dissent, termed
the result “unconscionable.”
As a result, Congress
enacted Section 1341,
which changes the result
in many future similar
cases.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
Still, the case is important
because of the fundamental
proposition for which it
stands.
6
U.S. v. Lewis, 340 U.S. 590 (1951).
• Lewis stands for one important proposition:
• This proposition is conjunction with two other famous
cases:
– North American Oil v. Burnet, 286 U.S. 417 (1932)
– U.S. v. Lewis, 340 U.S. 590 (1951).
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
7
U.S. v. Lewis, 340 U.S. 590 (1951).
• Lewis stands for one important proposition:
Every year stands alone.
• This proposition is conjunction with two other famous
cases:
– North American Oil v. Burnet, 286 U.S. 417 (1932)
– U.S. v. Lewis, 340 U.S. 590 (1951).
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
8
U.S. v. Lewis, 340 U.S. 590 (1951).
• Lewis stands for one important proposition:
Every year stands alone.
• This proposition is conjunction with two other famous
cases:
– North American Oil v. Burnet, 286 U.S. 417 (1932)
– U.S.
v. Lewis,
340 U.S.this
590 (1951).
Another
way
of saying
is that the United
States uses annual rather than transactional
accounting.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
9
U.S. v. Lewis, 340 U.S. 590 (1951).
• Lewis stands for one important proposition:
Every year stands alone.
• This proposition is conjunction with two other famous
cases:
– North American Oil v. Burnet, 286 U.S. 417 (1932)
– U.S.
v. Lewis,
340 U.S.this
590 (1951).
Another
way
of saying
is that the United
States uses annual rather than transactional
accounting.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
10
U.S. v. Lewis, 340 U.S. 590 (1951).
• Lewis stands for one important proposition:
Every year stands alone.
• This proposition is conjunction with two other famous
cases:
– North American Oil v. Burnet, 286 U.S. 417 (1932)
– U.S.
v. Lewis,
340 U.S.this
590 (1951).
Another
way
of saying
is that the United
States uses annual rather than transactional
accounting.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
11
U.S. v. Lewis, 340 U.S. 590 (1951).
• Lewis stands for one important proposition:
Every year stands alone.
• This proposition is conjunction with two other famous
cases:
– North American Oil v. Burnet, 286 U.S. 417 (1932)
– U.S.
v. Lewis,
340 U.S.this
590 (1951).
Another
way
of saying
is that the United
States uses annual rather than transactional
accounting.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
12
U.S. v. Lewis, 340 U.S. 590 (1951).
• Lewis stands for one important proposition:
Every year stands alone.
• This proposition is conjunction with two other famous
cases:
– North American Oil v. Burnet, 286 U.S. 417 (1932)
– U.S.
v. Lewis,
340 U.S.this
590 (1951).
Another
way
of saying
is that the United
States uses annual rather than transactional
accounting.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
13
U.S. v. Lewis, 340 U.S. 590 (1951).
• Lewis stands for one important proposition:
Every year stands alone.
• This proposition is conjunction with two other famous
cases:
– North American Oil v. Burnet, 286 U.S. 417 (1932)
– U.S. v. Lewis, 340 U.S. 590 (1951).
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
14
U.S. v. Lewis, 340 U.S. 590 (1951).
• Lewis stands for one important proposition:
Every year stands alone.
• This proposition is conjunction with two other famous
cases:
– North American Oil v. Burnet, 286 U.S. 417 (1932)
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931) U.S.
v. Lewis, 340 U.S. 590 (1951).
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
15
U.S. v. Lewis, 340 U.S. 590 (1951).
• Lewis stands for one important proposition:
Every year stands alone.
• This proposition is conjunction with two other famous
cases:
– North American Oil v. Burnet, 286 U.S. 417 (1932)
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931) U
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
16
U.S. v. Lewis, 340 U.S. 590 (1951).
• Lewis stands for one important proposition:
Every year stands alone.
• This proposition is conjunction with two other famous
cases:
– North American Oil v. Burnet, 286 U.S. 417 (1932)
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931) U
These two cases are also
on the top 100 list.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
17
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When does the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
18
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
Per
North American Oil,
• Until repayment, Lewis had “at all times” maintained and used
he
had a claim or right in
the money as his own.
1944.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When does the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
19
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
reported
the entire
• Until repayment, LewisHe
had
“at all times”
maintained and used
the money as his own.bonus when received.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When does the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
20
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When does the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
21
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When does the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
22
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
This mistake
was due
an error
– Lewis neglected
to deduct
thetorefund
in 1946.
committed by his employer . . . it was
– He sought a refund for 1944, by excluding the $11,000 on an
not Mr. Lewis’ mistake.
amended return.
• ISSUE:
– When does the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
23
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When does the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
24
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought
a refund
forthis
1944,
The Court
called
a by excluding the $11,000 on an
amended
return.
“good
faith though
• ISSUE: mistaken belief.”
– When does the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
25
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When does the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
26
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought
a refund
1944,
by excluding the $11,000 on an
Hence,
Lewisfor
paid
much
amended return.
more tax in 1944 on the extra
• ISSUE:
$11,000 than a 1946
– Whendeduction
does the taxpayer
would bereport
worth.the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
27
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought
a refund
1944,
by excluding the $11,000 on an
Hence,
Lewisfor
paid
much
amended return.
more tax in 1944 on the extra
• ISSUE:
$11,000 than a 1946
– Whendeduction
does the taxpayer
would bereport
worth.the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
28
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When does the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
29
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
He should have done so, but
• ISSUE:
he did not. As a result, the
– When does the taxpayer report the 1946 restoration?
statute of limitations closed
• 1946: through a deduction?
on 1946.
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
30
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When does the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
31
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When does the taxpayer
report
the 1946
restoration?
The
IRS then
denied
this
• 1946: through a deduction?
refund.
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
32
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When may the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
33
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When may the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
34
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When may the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
This was the government’s
position.
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
35
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When may the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
36
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When may the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
This was the taxpayer’s
position.
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
37
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought
a refund
1944,
by excluding the $11,000 on an
Hence,
Lewisfor
paid
much
amended return.
more tax in 1944 on the extra
• ISSUE:
$11,000 than a 1946
– Whendeduction
does the taxpayer
would bereport
worth.the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
Don’t forget this: the
• HOLDING:
government got more
– 1946 deduction. Even though TP paid more tax in 1944 than
its position.
the refund would have saved money
in 1946: from
every year
stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
38
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When may the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
39
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When may the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
40
U.S. v. Lewis, 340 U.S. 590 (1951).
• FACTS:
– 1944: Lewis received and reported a $22,000 bonus.
– 1946: Lewis returned $11,000 to his employer.
• Litigation had determined that Lewis was not entitled to the
money because of an incorrect computation.
• Until repayment, Lewis had “at all times” maintained and used
the money as his own.
– Tax rates were higher in 1944 than in 1946.
– Lewis neglected to deduct the refund in 1946.
– He sought a refund for 1944, by excluding the $11,000 on an
amended return.
• ISSUE:
– When may the taxpayer report the 1946 restoration?
• 1946: through a deduction?
• 1944: through an exclusion?
• HOLDING:
– 1946 deduction. Even though TP paid more tax in 1944 than
the refund would have saved in 1946: every year stands alone.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
41
U.S. v. Lewis, 340 U.S. 590 (1951).
• To summarize:
– When you hear of Sanford & Brooks you should associate
the case with the general rule that
– ould also associate the case with transactional accounting and
the notion that every year stands alone.
• Ideally, you would also associate the case with
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
– U.S. v. Lewis, 340 U.S. 590 (1951).
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
42
U.S. v. Lewis, 340 U.S. 590 (1951).
• To summarize:
– When you hear of U.S. v. Lewis, you should associate the
case with the general rule that
– ould also associate the case with transactional accounting and
the notion that every year stands alone.
• Ideally, you would also associate the case with
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
– U.S. v. Lewis, 340 U.S. 590 (1951).
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
43
U.S. v. Lewis, 340 U.S. 590 (1951).
• To summarize:
– When you hear of U.S. v. Lewis you should associate the
case with the general rule that
– ould also associate the case with transactional accounting and
the notion that every year stands alone.
Every year stands alone.
• Ideally, you would also associate the case with
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
– U.S. v. Lewis, 340 U.S. 590 (1951).
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
44
U.S. v. Lewis, 340 U.S. 590 (1951).
• To summarize:
– When you hear of U.S. v. Lewis you should associate the
case with the general rule that
– ould also associate the case with transactional accounting and
the notion that every year stands alone.
Every year stands alone.
• Ideally, you would also associate the case with
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
– U.S. v. Lewis, 340 U.S. 590 (1951).
Another way of saying this is that the United
States uses annual rather than transactional
accounting.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
45
U.S. v. Lewis, 340 U.S. 590 (1951).
• To summarize:
– When you hear of U.S. v. Lewis you should associate the
case with the general rule that
– ould also associate the case with transactional accounting and
the notion that every year stands alone.
Every year stands alone.
• Ideally, you would also associate the case with
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
– U.S. v. Lewis, 340 U.S. 590 (1951).
Ideally, you should also associate the case with
•North American Oil v. Burnet, 286 U.S. 417 (1932)
and
•Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
46
U.S. v. Lewis, 340 U.S. 590 (1951).
• To summarize:
– When you hear of U.S. v. Lewis you should associate the
case with the general rule that
– ould also associate the case with transactional accounting and
the notion that every year stands alone.
Every year stands alone.
• Ideally, you would also associate the case with
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
– U.S. v. Lewis, 340 U.S. 590 (1951)
– And, you should remember that congress enacted section
1341 to alleviate the unfairness of U.S. v. Lewis.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
47
U.S. v. Lewis, 340 U.S. 590 (1951).
• To summarize:
– When you hear of U.S. v. Lewis you should associate the
case with the general rule that
– ould also associate the case with transactional accounting and
the notion that every year stands alone.
Every year stands alone.
• Ideally, you would also associate the case with
– Burnet v. Sanford & Brooks, 282 U.S. 359 (1931)
– U.S. v. Lewis, 340 U.S. 590 (1951)
– And, you should remember that congress enacted section
1341 to alleviate the unfairness of U.S. v. Lewis.
This involves the restoration
of a claim of right.
© Steven J. Willis and UF College of Law 2007 All Rights Reserved
48