The U.S. Supreme Court case Helvering v. Tex-Penn Oil Co., 1936, revolved around the issue of taxation on oil and gas leases. The Commissioner of Internal Revenue, Guy T. Helvering, argued that payments received by Tex-Penn Oil Company from its lessees should be considered as income and thus taxable under federal law. However, the company contended that these were capital gains resulting from sales of property rights in their leased lands and therefore not subject to regular income tax rates but rather to lower capital gains tax rates. In a unanimous decision led by Justice Benjamin N Cardozo (though he is not specifically mentioned), the court ruled in favor of Helvering stating that such lease bonuses are part of gross income for an oil company's annual revenue calculations because they represent compensation for exploitation rights granted to lessees over a period time which falls within ordinary business operations rather than being one-time transactions akin to selling off assets or properties outright.

In the dissenting opinion for Helvering v. Tex-Penn Oil Co., Justice Cardozo disagreed with the majority's interpretation of Section 113(a)(8) and (b)(1) of the Revenue Act, which pertains to depletion allowances in oil production. He argued that these sections should not be read as allowing an oil company to claim a depletion allowance based on its gross income from property if it had previously sold off its rights to future royalties from that property. In his view, once those rights were sold, they became separate capital assets distinct from the original property; thus any income derived therefrom could not be considered part of the gross income from said property for purposes of calculating depletion allowances. The majority's decision effectively allowed double deductions: first when selling royalty rights and then again when receiving payments under those same contracts - something he believed Congress did not intend when drafting this legislation.