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

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 received the bonus under a claim of right and used it without a then-existing restriction, so the full amount was income in that year.

Later repayment did not rewrite the prior return

Discovery that the bonus had been miscalculated did not retroactively change the facts under which the earlier amount was received and taxed.

The repayment belonged to the later year

Under the law then governing, the taxpayer’s remedy was a deduction in the year of repayment rather than recomputation of the closed income year.

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.