In the case of Stahmann et al., doing business as Stahmann Farms Co. v. Vidal, Collector of Internal Revenue, 1938, the U.S Supreme Court was tasked with determining whether income derived from a pecan farm in New Mexico by non-resident alien partners should be taxed as effectively connected with a U.S trade or business under Section 211(b) of the Revenue Act of 1926. The court ruled that such income is not taxable because it falls within an exception for foreign corporations and nonresident aliens who do not engage in trade or business within the United States during their tax year. This decision clarified how taxation laws apply to foreign entities conducting agricultural operations on American soil.

In the dissenting opinion for Stahmann et al., Doing Business as Stahmann Farms Co., v. Vidal, Collector of Internal Revenue, it was argued that the majority's interpretation of the tax code was incorrect and overly broad. The dissenters believed that pecans grown on a farm owned by taxpayers should not be subject to an excise tax when they are shelled at a separate facility also owned by those same taxpayers before being sold in interstate commerce. They contended this did not constitute "manufacturing" under Section 600(a) of the Revenue Act of 1926 because there is no transformation or change in form or substance from raw material into a new and different article having distinctive name, character or use; rather it is merely removing shells which do not alter pecan’s nature nor make them more marketable than unshelled ones. Therefore, according to their view, such activity does not fall within Congress' power to levy taxes on manufacturing processes.