Tax Legal Services · Primary-source case analysis

Lewis: Repaying Salary Previously Taxed Did Not Reopen the Earlier Tax Year

By Aneeta Mishra and Timothy Chan

Published August 25, 2026 · Updated October 17, 2026

Decision: United States v. Lewis, 340 U.S. 590 (1951).

United States v. Lewis considered whether a later repayment permitted the taxpayer to recompute the prior year rather than claim the relief available in the repayment year.

The taxpayer had unrestricted control when paid

Lewis reported about $22,000 in bonus income in 1944 and used it as his own. A later state-court judgment required him to return approximately $11,000 in 1946 because the bonus had been miscalculated. The earlier unrestricted receipt remained income. Lewis, 340 U.S. at 590–591.

Later repayment did not rewrite the prior return

The Court of Claims had allowed a refund because Lewis received the excess under a mistake of fact. The Supreme Court rejected that exception and reversed: A good-faith mistake about entitlement did not remove the income from the year Lewis controlled it. Justice Douglas dissented, arguing that a refund should remain available after the mistake was judicially established. Lewis, 340 U.S. at 591–592.

The repayment belonged to the later year

The government’s position was a deduction in the repayment year rather than recomputation of the receipt year. The Court preserved annual accounting and rejected the earlier-year refund. This 1951 result predates section 1341; a current repayment needs its own statutory analysis, not an assumption that the two years can simply be netted. Lewis, 340 U.S. at 591–592.

Section 1341 now may alter the result

Congress later enacted claim-of-right mitigation. Current eligibility, tax computation, deduction-versus-credit treatment, and exceptions must be analyzed before relying on Lewis mechanically.

Key takeaways

• Document whether receipt was unrestricted in the original year.
• Identify when and why the repayment obligation became fixed.
• Test every requirement of current section 1341.
• Compare the repayment-year deduction and statutory credit computations.