In the 1917 case of Krueger v. United States, the Supreme Court dealt with issues related to income tax and whether certain types of income were taxable under existing laws. The plaintiff, Charles F. Krueger, was a stockholder in a corporation who received dividends from said corporation which he did not include in his gross income when filing his federal taxes for 1909 and 1910. The Commissioner of Internal Revenue determined that these dividends should have been included as part of Krueger's gross income and assessed additional taxes accordingly. Krueger contested this decision arguing that the dividends were paid out from surplus profits accumulated by the company before January 1st, 1909 - prior to when corporate incomes became subject to taxation under law - hence they should be exempted from personal taxation. The Supreme Court ruled against him stating that regardless of when those profits had been earned by the corporation, once distributed as dividends they constituted an increase in wealth for Mr.Krueger during years (1909 &1910) where such increases were taxable according to law.

In the dissenting opinion for Krueger v. United States, Justice Holmes argued that the defendant's conviction should be overturned because he was not given a fair trial. He believed that the evidence used against Krueger was obtained illegally and therefore should have been excluded from his trial. Furthermore, he contended that even if this evidence were admissible, it did not conclusively prove Krueger's guilt beyond a reasonable doubt as required by law. According to Holmes, there were too many uncertainties and inconsistencies in the prosecution's case to justify a guilty verdict. Therefore, he concluded that upholding Krueger’s conviction would violate his constitutional rights to due process and equal protection under the law.