The Helvering v. Helmholz case in 1935 revolved around the issue of tax liability for income generated from a trust fund. The respondent, Mrs. Helmholz, was the beneficiary of a trust established by her late husband and argued that she should not be held liable for taxes on the income produced by this trust as it was created without her consent or knowledge and she had no control over its management or disposition of funds. However, Commissioner Guy T. Helvering contended that under Section 167(a) of the Revenue Act (1928), any person who receives an economic benefit is subject to taxation regardless if they have direct control over their source of income or not. The Supreme Court ruled in favor of Commissioner Helvering stating that Mrs.Helmholz's lack of control did not exempt her from paying taxes on benefits received from the trust fund since she still enjoyed an economic gain which is taxable under law.

In the dissenting opinion for Helvering v. Helmholz, Justice Stone argued that the majority's interpretation of Section 302(c) of the Revenue Act was incorrect and overly broad. He believed that this section should not apply to cases where a corporation is liquidated and its assets are distributed among shareholders, as it was in this case. Instead, he contended that Section 302(c) only applies when there is an exchange of stock between a shareholder and a corporation which results in complete termination of proprietary interest by such shareholder in said corporation. In his view, since Mrs. Helmholz retained her interest through her husband’s shares after liquidation occurred, she did not completely terminate her proprietary interests; therefore no distribution or tax should be imposed on them under Section 115 (c). The justice also expressed concern about potential abuse if any transfer could trigger taxation under this provision.