In the case of Helson and Randolph, Co-Partners v. Kentucky in 1928, the U.S Supreme Court ruled on a dispute involving taxation. The state of Kentucky had imposed an income tax on profits that were earned by two residents (Helson and Randolph) from their partnership with a cotton oil company based in Tennessee. The partners argued that this violated the Due Process Clause of the Fourteenth Amendment because they believed it was unconstitutional for Kentucky to tax income derived from another state's operations. However, the court disagreed with them stating that as long as taxpayers maintained their domicile within its borders, a state could impose taxes upon incomes received elsewhere without violating due process rights under federal law. Therefore, it upheld Kentucky’s right to levy such taxes.

In the dissenting opinion for Helson and Randolph v. Kentucky, Justice Holmes argued that the state of Kentucky had no right to tax a federal bank's stock shares owned by non-residents. He contended that such taxation was an infringement on national sovereignty as it interfered with federal operations. Holmes believed this case should have been decided based on McCulloch v. Maryland (1819), which established states cannot interfere with or control institutions created by Congress under its constitutional powers. He maintained that while states can tax their own citizens' income from any source within or outside the state, they cannot impose taxes directly upon property situated beyond their borders or indirectly through taxing income derived therefrom when not in possession of residents.