In the District of Columbia v. Colts case in 1930, the U.S Supreme Court ruled on a dispute involving tax law and constitutional rights. The respondent, Mrs. Elizabeth Colt had inherited property from her late husband who was a resident of Rhode Island at his time of death but owned taxable personal property in Washington D.C. Upon his death, this property was taxed by both Rhode Island and Washington D.C., leading to double taxation which Mrs. Colt contested as unconstitutional under the Due Process Clause of the Fifth Amendment. The Supreme Court held that it is not within its jurisdiction to decide how states should allocate their taxing powers among themselves or with other jurisdictions such as Washington D.C.. It further stated that if there were any unfairness or injustice due to multiple taxes being levied on same properties by different jurisdictions, it is up to Congress rather than courts to rectify through legislation. Therefore, while acknowledging potential issues arising from double taxation across state lines or between states and federal districts like DC, the court upheld DC's right to levy inheritance tax on Mr.Colts' estate located within its boundaries even though similar taxes were also imposed by Rhode Island where he resided.

In the dissenting opinion for the District of Columbia v. Colts case, Justice Stone argued that the majority's decision was inconsistent with previous rulings and principles regarding tax law. He disagreed with their interpretation of "income" under Section 213(a) of Revenue Act 1921, which they defined as including all gains or profits derived from any source whatsoever. He believed this definition should include capital gains like those at issue in this case - a gain realized by Mrs. Colt from selling her husband's life insurance policy after his death. According to him, such profit is not exempted from taxation merely because it resulted from a transaction completed upon the death of another person (her husband). The majority’s ruling contradicted earlier decisions where proceeds received on maturity were treated as income subject to tax if exceeding total premiums paid over time.