In the 1939 case of Helvering v. Johnson, the United States Supreme Court ruled on a matter related to income tax law. The respondent, Johnson, had received dividends from his company in 1932 and reported them as taxable income for that year. However, he later discovered that these dividends were actually paid out of capital surplus rather than profits or earnings and thus should not have been considered taxable income according to existing laws at the time. He filed a claim for refund which was rejected by Commissioner of Internal Revenue Guy T. Helvering who argued that such dividends are still subject to taxation regardless of their source being capital surplus or profit/earnings. The Supreme Court sided with Johnson's argument stating that under Section 115(a) & (b) of Revenue Act 1928; it is clear Congress intended only distributions made out of earnings/profits accumulated after February 28th,1913 would be taxed as dividend income while those made from other sources like capital surplus wouldn't be subjected to this tax treatment. This decision clarified how different types/sources of corporate distributions/dividends should be treated under U.S federal tax law.

In the dissenting opinion for Helvering v. Johnson, Justice McReynolds disagreed with the majority's interpretation of Section 22(a) of the Revenue Act. He argued that it was not Congress' intention to tax gifts and inheritances as income, but rather they were meant to be taxed separately under estate and gift taxes. According to him, a broad interpretation of "income" would lead to double taxation which is against principles of fairness in taxation policy. Furthermore, he pointed out that there was no clear legislative intent shown by Congress when drafting this law indicating their desire for such an expansive definition of income including gifts or inheritances received by taxpayers.