Wilmington Trust Co. v. United States

These three consolidated federal income tax refund suits present two separate issues: (1) whether certain expenses the taxpayers incurred in connection with their timber operations, the gain on which is capital gain, were ordinary business expenses and hence deductible from taxpayers’ ordinary income (as taxpayers contend), or were part of the cost of selling the timber and therefore deductible only from the capital gains (as the government argues); (2) whether, under the doctrine of equitable recoupment, the government could offset against refunds due to the taxpayers for overpayment of…