In the case of International Business Machines Corp. v. United States in 1935, IBM challenged the U.S government over a tax dispute. The issue at hand was whether or not punch cards used by IBM's machines were subject to manufacturer’s excise tax as "parts" and "accessories". The Supreme Court ruled against IBM, stating that these punch cards were indeed an essential part of the machine and therefore should be taxed accordingly. This decision established a precedent for how integral components of technology are classified for taxation purposes.

In the dissenting opinion for the case of International Business Machines Corp. v. United States, it was argued that IBM should not be liable for taxes on machines leased to customers because these transactions were leases and not sales. The dissenting justices believed that a lease does not transfer ownership rights; therefore, it cannot be considered as a sale which is subject to taxation under federal law. They contended that there was no statutory basis or precedent in tax law at the time to support taxing such transactions as sales rather than leases. Furthermore, they expressed concern about potential negative impacts on businesses if leasing equipment became taxable like selling equipment since many companies relied on leasing as part of their business models.