The Avery v. Commissioner of Internal Revenue case in 1933 revolved around the issue of tax liability for a trust fund's income. The plaintiff, Mrs. Avery, had set up a trust fund for her children and argued that she should not be held liable for taxes on the income generated by this fund as she did not have control over it or benefit from it directly. However, the Supreme Court ruled against her, stating that since she was still alive when the trust was created and could potentially regain control over its assets if certain conditions were met (such as all trustees dying before her), she remained "in command" of these funds to some extent and thus needed to pay taxes on them. This decision established an important precedent regarding taxation rules related to trusts.

In the dissenting opinion for Avery v. Commissioner of Internal Revenue, the justice argued that the majority's interpretation of "income" was too broad and inconsistent with previous court decisions. The justice believed that income should only include gains or profits derived from capital, labor, or both combined. In this case, Mr. Avery did not receive any gain or profit when he received stock dividends; instead, his wealth remained constant because each share's value decreased as more shares were issued. Therefore, these stock dividends should not be considered taxable income under the Sixteenth Amendment to the Constitution according to him.