In the case of Hellmich, Collector v. Isadore N. Hellman (1927), the U.S Supreme Court was tasked with determining whether or not a certain tax assessment was valid under federal law. The dispute arose from an income tax that had been levied on Mr. Hellman's profits from selling stock in 1919, which he argued should be considered capital gains and thus taxed at a lower rate than ordinary income. However, the IRS disagreed and assessed him for additional taxes based on their interpretation of the Revenue Act of 1918 as treating such profits as regular income subject to higher rates. The Supreme Court sided with Mr.Hellman, ruling that his profit from selling stocks indeed constituted capital gain rather than ordinary income under existing laws at that time; therefore it should have been subjected to lower taxation rates accordingly. This decision clarified how certain types of financial transactions were to be treated for taxation purposes under federal law during this period in American history.

In the dissenting opinion for Hellmich, Collector, v. Isadore N. Hellman (1927), Justice Holmes argued that the majority's interpretation of Section 213(a) of the Revenue Act was incorrect and too narrow in scope. He believed that this section should be interpreted to include all property acquired by inheritance or gift, not just those specifically mentioned in subsections (b) and (c). According to his view, it is irrelevant whether a taxpayer has received income from such property before its sale; what matters is only if they have sold it at a profit later on. Therefore, he disagreed with the majority's decision to exempt Mr. Hellman from paying taxes on profits made from selling inherited stock because these stocks were not explicitly listed as taxable items under Section 213(a).