In the case of Crooks, Collector of Internal Revenue v. Harrelson et al., 1930, the U.S Supreme Court was asked to determine whether a federal tax on whiskey could be collected from an individual who had already paid a state tax on the same product. The plaintiff argued that he should not have to pay both taxes as it constituted double taxation and violated his constitutional rights. However, the court disagreed with this argument and ruled in favor of the defendant (Crooks). They held that there was no prohibition against dual taxation by both state and federal governments under U.S law or constitution. Therefore, even if an individual has paid a state tax on certain goods or services, they are still required to pay any applicable federal taxes.

In the dissenting opinion for Crooks v. Harrelson, Justice Stone argued that the majority's decision to allow a tax deduction on an illegal payment was inconsistent with previous court rulings and federal law. He contended that allowing such deductions would essentially condone illegal activities by lessening their financial impact, which is contrary to public policy. Furthermore, he pointed out that there were no provisions in the Revenue Act of 1921 or any other federal statute explicitly permitting deductions for unlawful payments. Therefore, he believed it was inappropriate for the Court to interpret these laws as providing such allowances when Congress had not expressly done so itself.