In the 1936 case of Algernon S. Schafer v. Helvering, Commissioner of Internal Revenue, the U.S Supreme Court ruled on a matter concerning income tax law and its application to stock dividends. The petitioner, Algernon S. Schafer had received a dividend in preferred stock from his company but did not include it as taxable income on his return for that year because he believed it was not actual gain or profit until sold or converted into money or property other than shares of stock in the same corporation. However, this interpretation was challenged by Guy T. Helvering, Commissioner of Internal Revenue who argued that such dividends were indeed subject to taxation under existing laws. The court sided with Helvering's argument stating that even though no cash changed hands when Schafer received the dividend stocks; they still represented an economic benefit and thus should be considered taxable income regardless if they are sold later for profit or loss. This ruling clarified how certain types of non-cash benefits could be treated as taxable income under federal law which has significant implications for corporate executives and shareholders alike who often receive compensation in forms other than direct salary payments.

The dissenting opinion in the case of Algernon S. Schafer v. Helvering, Commissioner of Internal Revenue argued that the majority's decision was inconsistent with previous rulings and interpretations of tax law. The dissent emphasized that a taxpayer should not be penalized for taking advantage of legal methods to minimize their tax liability, as long as they are acting within the bounds of the law. They contended that there was no evidence to suggest any wrongdoing or evasion on part of Schafer; he merely took advantage of existing laws and regulations to reduce his taxes legally. Therefore, according to this viewpoint, it would be unjustified and unfair to impose additional taxes retrospectively based on changes in interpretation or understanding after-the-fact.