In the case of Helvering v. Gowran, 1937, the U.S Supreme Court ruled on a matter concerning income tax law. The respondent, James A. Gowran, had received dividends from stock he held in a corporation and argued that these should be taxed as capital gains rather than ordinary income because they were paid out of earnings accumulated before becoming taxable as dividends under the Revenue Act of 1913. However, Commissioner Guy T. Helvering contended that regardless of when earnings were accumulated by corporations paying them out as dividends to shareholders made them taxable at regular rates for those recipients. The court sided with Commissioner Helvering's interpretation and upheld his decision to tax Mr.Gowran's dividend income at normal rates instead of lower capital gains rate arguing that it was not relevant when corporate profits were earned but how they are distributed matters more for taxation purposes. This ruling set an important precedent in US tax law regarding treatment of dividend payments which has significant implications on both individual taxpayers and corporations alike.

In the dissenting opinion for Helvering v. Gowran, Justice Benjamin N. Cardozo disagreed with the majority's interpretation of Section 22(a) of the Revenue Act of 1928 in relation to stock dividends and capital gains tax. He argued that a taxpayer should not be taxed on unrealized appreciation unless there is an actual realization or change in form that makes it ripe for taxation. According to him, this principle was established by Eisner v Macomber case where it was ruled that stock dividends were not taxable income because they represented unrealized gain or mere accretion in value until sold or otherwise disposed off. Therefore, he believed that taxing Mr.Gowran on his receipt of additional shares as part of a non-taxable dividend distribution from Standard Oil Company violated this principle since no sale had occurred at the time he received them; hence no realized gain existed upon which to levy a tax.