In 1936, International Freighting Corporation, Inc. (International Freighting) (plaintiff) issued bonuses in the form of 150 shares of stock to its employees. Altogether, the bonus stock had a fair market value of $24,858.75. International Freighting had only paid $16,153.36 for them. International Freighting deducted $24,858.75 as a business expense for that year. The Commissioner (defendant) reduced the amount of the deduction, arguing that by paying the bonus in the form of property, the value of the business expense was equal to the cost of the property, which was only $16,153.36. International Freighting brought this action in the Tax Court to determine the proper amount of the deduction. The Commissioner argued that if the entire $24,858.75 were deductible, then the Tax Court must also find that International Freighting realized a gain of $8,705.39 upon disposition of the stock. The Tax Court ruled that the entire $24,858.75 was deductible as a business expense but that International Freighting realized $8,705.39 in taxable income by disposing of the shares.