Burnet v. Logan, 283 U.S. 404 (1931), was a case before the United States Supreme Court. Facts Respondent, Mrs. Logan, prior to March 1913 and until March 11, 1916, owned shares in Andrews & Hitchcock Iron Company which in turn held 12% in the Mahoning Ore & Steel Company which mined iron ore. Andrews & Hitchcock was later acquired by the Youngstown Sheet & Tube Company. Youngstown Sheet and Tube agreed to pay $2.2 million to the shareholders and 60 cents annually thereafter for each ton of ore apportioned to their shares. Respondent received this money over time, but claimed that no income tax should arise until she received the total amount of the sale of her stock equal to its value on March 1, 1913. The Commissioner of Internal Revenue ruled that the obligation to pay 60 cents per ton had a fair market value of almost $2 million, and "that this value should be treated as so much cash and the sale of the stock regarded as a closed transaction with no profit in 1916". The Circuit Court of Appeals held that it was impossible to determine with certainty the fair market value of the agreement. Hence, respondent was entitled to the return of her capital before she could be charged with any taxable income. Since her capital had not been returned, there was no taxable income. Holding The U.S. Supreme Court agreed with the result reached by the Circuit Court of Appeals. When the profit of a transaction, if any, is actually realized, then taxpayer will be required to respond. In order to determine whether there is a gain or loss, the initial capital at the beginning of the period in consideration must first be recovered. As annual payments from extracted ore are paid, they can be apportioned as return of capital and later profit. The liability for income tax can be fairly determined without resort to conjecture. The initial promise has no ascertainable fair market value, so the transaction was not closed. Mrs. Logan may never have recouped her initial investments from payments that were promised to her. Based on the facts there is no way to fairly evaluate the promise of 60 cents a ton for an undisclosed portion of time. Therefore, income will only be included after all the basis has been recovered. Significance The case presents an example of an open transaction case.