This section contains the nature of the case and procedural background.

P donated several parcels of property to charity. The first donation was made in 1939 and the second was made in 1940. Under applicable corporate tax rates, P claimed deductions of $4,243.49 and $4,463.44. These resulted in aggregate tax benefits of $1,877.49. The lands were conveyed subject to the condition that the property be used either for religious or for educational purposes. In 1957, the donee decided not to use the gifts, and they were reconveyed to P. P decided to characterize the property as a nontaxable return of capital. The IRS did not find that amusing. The IRS added income of $8,706.93, and this raised the corporate tax rate of P and resulted in an assessment of $4,527.60. P paid then filed for a refund of $2,650.11 under the theory that the correct assessment was the return of the tax benefit originally enjoyed. That claim was disallowed.

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