Case Brief and Analysis

Case Brief and Analysis


Freeland, J. J., Lind, S. A., & Stephens, R. B. (1998). Fundamentals of Federal Income Taxation (pp. 27-30). Foundation Press.


The respondent, Lewis presented a claim to seek the overpayment income tax of 1944. The Courts found out that the plaintiff had received an employee bonus of $22,000 in 1944 income tax return. The Court also determined that there was a miscalculation of the bonus as his bonus for the year 1944 was $11,000 thus was supposed to return the excess amount to his employer (Freeland, Lind & Stephens, 1998). However, the respondent used the whole amount of $22,000 as his until 1946. He returned the excess but filed a lawsuit in the Court of Claims to get the refund on the taxes he paid on the excess bonus he had to return to his employer as his income tax for the year 1944 had been improperly computed.


The issue, in this case, is whether there is the need to include the appropriate bonus in the income tax return of the respondent.


The government’s position on this case is that there is no need to recompute the respondent’s income tax returns for the year 1944 but deduct the $11,000 as a loss in the 1946 income tax return. The case of Greenwald v. the United States acted as a reference to the Court Claims thus held that the excess bonus received by the employee “under a mistake of fact” was not in the 1944 income. Therefore, the refund should only take place on account of recalculating the income tax of 1944 (Freeland, Lind & Stephens, 1998). The North America Oil v. Burnet had presented the approach to take concerning the employee bonus. It provides that in case the taxpayer gets the earnings under the rights claims and without the disposition restrictions, the taxpayer has received an income that he has to return even if there is the claim that he should not retain the money. Besides, there are no restrictions on tax returns also if there is a mistaken claim of rights and every individual with an annual income is liable to pay taxes.

However, it is compulsory to pay income tax on the income received for that specific income year. The respondent should have therefore reported the employee the bonus he receives for the year 1944 to compute for the correct amounts thus correct the claims and have the right figures for the computation of the correct values. Justice Douglas’ opinion is that the Court must examine if the respondent has the right to claim the refund for the tax he paid in 1944 (Freeland, Lind & Stephens, 1998). It is not a matter of including the bonus income of 1944 for taxation but should be included upon the establishment of the taxpayer’s right of claim. After some years without reporting the claim, the judicial established that the respondent had could not claim the bonus. It is therefore questionable if he can get the tax that he had paid on the income tax.

The tax income has several inequities, yet they are not distinct in the administrative law. Therefore the allowing for tax refund violates the integrity of the taxable year that the tax had to apply (Freeland, Lind & Stephens, 1998). Is thus necessary to pay tax when it is due even though the government may not be in a position to keep the tax on the payments that are not from the taxpayer’s income.  The respondent received the money under the claim of the right without the restriction on disposition.

It is possible that it might have been reported in for computation of taxable income for the year 1944. The respondent might have mistaken his right claim of money, but that does not change the rule concerning the tax year to include the amount as income tax returns. The respondent should therefore not get a refund but deduct the $11,000 as a loss in the 1946 income tax returns.




Freeland, J. J., Lind, S. A., & Stephens, R. B. (1998). Fundamentals of Federal Income Taxation (pp. 27-30). Foundation Press.