In the 1940 case of Hort v. Commissioner of Internal Revenue, the U.S Supreme Court ruled on a tax dispute involving the transfer of property as compensation for services rendered. The petitioner, Mrs. Hort, had transferred securities to her husband's creditors in order to settle his debt and claimed that this transaction was not taxable income but rather a capital loss since she received nothing in return for these securities. However, the court disagreed with her argument stating that when property is transferred as payment for services it should be considered gross income and therefore subject to taxation under Section 22(a) of the Revenue Act of 1932. The court held that Mrs. Hort’s transfer constituted an economic gain because it relieved her from personal liability which would have been incurred if she hadn't settled her husband's debts.

In the dissenting opinion for Hort v. Commissioner of Internal Revenue, Justice Frankfurter argued that the majority's decision was inconsistent with previous case law and a misinterpretation of tax statutes. He contended that when an individual receives property as compensation for services rendered, it should be considered taxable income regardless if they immediately sell or transfer it to another party. The justice believed this interpretation aligns more closely with the intent of Congress in drafting tax laws and would prevent individuals from avoiding taxation through strategic transactions. Furthermore, he expressed concern about potential abuses where people could evade taxes by arranging to receive payment in forms other than cash which they then quickly convert into money.