In the 1918 case of Crocker et al., Trustees v. Malley, Collector of Internal Revenue, the United States Supreme Court dealt with an issue related to income tax law. The plaintiffs were trustees who had received dividends from a corporation and then distributed them to beneficiaries. They argued that they should not be taxed on these dividends because they acted merely as conduits for the money. However, the defendant contended that under federal law at that time, anyone who received taxable income was liable for paying taxes on it - regardless if they kept it or passed it onto someone else. The court ruled in favor of Malley (the collector), holding that even though trustees did not personally benefit from this income, their receipt and control over such funds constituted "income" within meaning of applicable tax laws; therefore making them subject to taxation.

In the dissenting opinion for Crocker et al., Trustees, v. Malley, Collector of Internal Revenue (1918), Justice Holmes argued that the tax in question should not be considered a direct tax but rather an excise tax on the privilege of transferring property at death. He contended that it was irrelevant whether or not this transfer occurred through a trust because trusts are simply legal mechanisms used to facilitate such transfers. Furthermore, he disagreed with the majority's interpretation of constitutional provisions regarding taxation and believed they were applying them too rigidly without considering their underlying principles and purposes. Holmes asserted that these provisions were intended to prevent undue burdens on certain states or individuals, which he did not believe was occurring in this case.