In the case of Commissioner of Internal Revenue v. Korell in 1949, the U.S Supreme Court ruled on a tax dispute involving capital gains from stock sales. The respondent, Mr. Korell, had sold stocks that he received as compensation for his services to an oil company and reported these earnings as capital gains rather than ordinary income on his federal income tax return. The IRS disagreed with this classification and assessed additional taxes against him based on their belief that these should be considered regular income subject to higher taxation rates. The court sided with Mr. Korell, ruling that since he was not obligated to sell the shares immediately upon receipt but could hold onto them if desired (which would potentially result in a loss), they constituted property held by taxpayer who might sell at gain or suffer loss depending upon market fluctuations; thus making it eligible for treatment as capital assets under applicable provisions of Internal Revenue Code. This decision clarified how certain types of stock-based compensation can be treated for tax purposes when such stocks are sold by recipients - specifically those where there is no obligation to immediately liquidate said assets.

In the dissenting opinion for the Commissioner of Internal Revenue v. Korell case, it was argued that the majority's decision to allow a taxpayer to deduct losses from his income tax due to embezzlement by an employee was incorrect. The dissenting justices believed that this interpretation of Section 23(e)(2) of the Internal Revenue Code was too broad and not in line with Congress' intent when drafting the law. They pointed out that allowing such deductions would mean taxpayers could potentially claim deductions for any loss suffered as a result of criminal activity, which they felt went beyond what Congress had intended with this provision. Furthermore, they disagreed with treating embezzlement as a "theft" under Section 23(e)(2), arguing instead that it should be considered separately and not eligible for deduction under this section.