In the Hulburd v. Commissioner of Internal Revenue case in 1935, the U.S Supreme Court ruled on a matter concerning federal income tax laws. The petitioner, Mr. Hulburd, had received dividends from his investments in Canadian corporations and argued that these should not be subject to U.S taxation as they were already taxed by Canada. However, the court disagreed with this argument stating that under existing law at the time (Revenue Act of 1928), all income earned by an American citizen is taxable regardless of its source location unless specifically exempted by statute or treaty provision - which was not applicable here. The court held that double taxation did occur but it was permissible because both countries have jurisdiction over their respective taxpayers and can impose taxes accordingly without violating any principles of international law or justice. Therefore, Mr.Hulburd's claim for refunding part of his paid taxes was denied and he remained liable for paying full US tax on his foreign dividend income.

In the dissenting opinion for Hulburd v. Commissioner of Internal Revenue, Justice Stone argued that the majority's interpretation of Section 22(a) and (b)(2) of the Revenue Act was incorrect. He believed that these sections should not be read to exclude from gross income any increase in value realized upon conversion of capital assets into cash or its equivalent. Instead, he contended that Congress intended to tax all gains derived from labor, business or sales or exchanges of property as income unless specifically exempted by law. Therefore, according to him, a taxpayer who sells his stock at a profit is liable for an income tax on his gain regardless if it represents an appreciation in value during ownership period because such gain falls within statutory definition of gross income under section 22(a). Furthermore, he disagreed with majority’s view about legislative history and purpose behind enactment of section 113(a), stating it does not support their conclusion but rather indicates opposite intent i.e., taxing all profits derived from sale/exchange transactions involving capital assets except those expressly excluded by statute itself.