In the case of Renziehausen v. Lucas, Commissioner of Internal Revenue in 1929, the U.S Supreme Court ruled on a dispute regarding income tax liability. The petitioner, Mr. Renziehausen was an American citizen living abroad who had received dividends from his investments in US companies and argued that he should not be liable for paying taxes on these dividends as he was not residing within the country at that time. However, according to Section 217(a) of the Revenue Act of 1924 which stated that gross income includes "dividends", it did not matter where one resided; if they were receiving dividends from US corporations then they were subject to taxation by default. The court upheld this interpretation and rejected Mr. Renziehausen's argument stating that Congress has full authority over imposing such taxes regardless of whether or not a person is physically present within its borders when earning said income.

The dissenting opinion in the Renziehausen v. Lucas case argued that the majority's decision was inconsistent with established legal principles regarding income tax law and property rights. The dissent contended that a taxpayer should not be liable for taxes on an increase in value of their property until they have realized this gain through sale or other disposition, rather than merely when it is assessed by tax authorities. This view held that unrealized gains are not "income" under the 16th Amendment to the Constitution, which authorizes Congress to levy taxes on incomes from whatever source derived. Therefore, taxing such increases as if they were actual income would violate taxpayers' constitutional rights. Furthermore, it was suggested that this approach could lead to unfair results because taxpayers might be taxed on paper profits but later suffer losses if their properties decrease in value after assessment but before sale.