In the case of Bus & Transport Securities Corp. v. Helvering, Commissioner of Internal Revenue, 1935, the U.S Supreme Court was tasked with determining whether a corporation's distribution to its shareholders constituted taxable income or return on capital investment. The court ruled in favor of Helvering and held that such distributions were indeed taxable income under Section 115(a) and (g) of the Revenue Act of 1928. This decision was based on their interpretation that these sections did not distinguish between earnings accumulated before or after February 28th, 1913 (the effective date for federal income tax). Therefore, all corporate profits distributed as dividends should be considered part of gross income unless explicitly exempted by law.

In the dissenting opinion for Bus & Transport Securities Corp. v. Helvering, Justice Stone argued that the majority's interpretation of Section 77B of the Bankruptcy Act was incorrect and overly broad. He contended that this section should not be applied to corporations in receivership unless they were also insolvent or bankrupt, as it would otherwise allow solvent companies to evade their tax obligations by entering into voluntary receiverships. Furthermore, he disagreed with the majority's view that a corporation could only be considered "insolvent" if its liabilities exceeded its assets at fair market value rather than book value; he believed this approach ignored economic realities and unfairly penalized creditors who had relied on book values when extending credit. Finally, Justice Stone criticized the majority for failing to consider whether Congress intended Section 77B to apply in such circumstances.