The U.S. Supreme Court case John A. Nelson Co. v. Helvering, Commissioner of Internal Revenue in 1935 revolved around the issue of tax liability for a corporation that had dissolved and distributed its assets to shareholders before paying federal income taxes due for previous years' earnings. The court ruled against John A. Nelson Company, stating that it was still liable for these unpaid taxes despite its dissolution because the company's corporate existence continued until all debts were settled as per state law (in this case, Delaware). This ruling established an important precedent regarding corporate responsibility and tax obligations after dissolution.

In the dissenting opinion for John A. Nelson Co. v. Helvering, Commissioner of Internal Revenue, Justice Stone argued that the majority's interpretation of tax law was incorrect and overly broad in its application to corporations' capital stock transactions. He contended that a corporation should not be taxed on funds it received from selling its own capital stock above par value because such transactions do not constitute income under the Sixteenth Amendment or any other relevant statute or regulation at that time. According to him, these proceeds are part of a company’s initial investment pool and thus should be exempted from taxation as they do not represent profits derived from business operations but rather an increase in invested capital.