In the case of Helvering, Commissioner of Internal Revenue v. Fried (1936), the United States Supreme Court ruled on a matter concerning federal income tax law. The issue at hand was whether or not an individual could claim deductions for losses incurred from selling property to a corporation in which they were majority shareholders. Mr. Fried had sold several properties to corporations he controlled and claimed these transactions as losses on his personal income tax return, arguing that they were legitimate business expenses since he used them to maintain control over said corporations. The IRS disagreed with this interpretation and argued that these transactions constituted sales between related parties rather than genuine business expenses; therefore, any loss arising from such sales should not be deductible under Section 24(b) of the Revenue Act of 1928. Upon review, the Supreme Court sided with the IRS's argument by upholding their decision against Mr. Fried's claims for deduction based on intercorporate transfers involving controlling interests in both entities involved in each transaction.

In the dissenting opinion for Helvering v. Fried, Justice Cardozo argued that the majority's interpretation of Section 22(a) of the Revenue Act was too broad and inconsistent with its legislative intent. He contended that Congress did not intend to tax gifts or bequests as income but rather aimed at taxing gains from labor, capital, or both combined. According to him, a gift is not an accession to wealth "springing from capital" nor does it constitute profit derived from any investment or source connected with production; hence it should not be considered taxable income under section 22(a). Furthermore, he disagreed with the majority's view on Mrs. Fried’s case where she received stock dividends as a gift which they deemed taxable income; instead he believed these were non-taxable gifts since there was no cost basis involved in receiving them.