In the 1930 case of Eckert v. Burnet, Commissioner of Internal Revenue, the U.S. Supreme Court addressed a dispute over income tax liability related to stock dividends. The petitioner, Mrs. Eckert, received a dividend in 1917 from her ownership stake in Union Pacific Railroad Company which was paid out entirely in common shares rather than cash and argued that this should not be considered taxable income under the Revenue Act of 1916 and 1918 because it did not alter her proportionate interest or increase her wealth since she merely exchanged one form for another without realizing any gain. The court disagreed with Mrs. Eckert's argument ruling against her by stating that these dividends were indeed taxable as they represented an actual gain to shareholders even if no change occurred in their proportional interest within the company due to distribution being made from corporate profits accumulated after March 1st,1909 (the effective date of Corporate Tax Law). Therefore, according to Justice Holmes who delivered the opinion for unanimous court decision; such distributions are subject to taxation regardless whether they're paid out as cash or additional stocks.

In the dissenting opinion for Eckert v. Burnet, it was argued that the majority's decision to tax a widow on her deceased husband's estate was unjust and inconsistent with previous rulings. The dissenters believed that the income in question should not be considered part of Mrs. Eckert’s gross income as she did not have full control over it until after her husband’s death, thus making it inappropriate to impose an income tax upon her during his lifetime. They also pointed out inconsistencies between this ruling and earlier decisions where widows were not taxed under similar circumstances, arguing for more consistency in court rulings regarding taxation laws. Furthermore, they emphasized that taxing Mrs.Eckert would set a dangerous precedent by allowing the government to levy taxes on individuals who do not truly possess or control their supposed "income".