In the case of United States v. Biwabik Mining Company (1917), the Supreme Court was tasked with determining whether or not a mining company could claim deductions for depletion of its ore deposits under an 1896 tax law. The government argued that since the ore was part of the land, it should be considered real estate and thus not subject to depreciation. However, Biwabik Mining Company contended that as they extracted and sold off their mineral resources, these assets were being depleted and hence should qualify for deduction from gross income just like any other business asset would depreciate over time due to wear and tear. The court sided with Biwabik Mining Company in a unanimous decision stating that minerals such as iron are indeed depletable assets rather than non-depreciable real estate property because once removed from earth's crust they cannot be replaced or restored unlike buildings on land which can be repaired or improved upon. This ruling set a precedent allowing mining companies to deduct costs associated with depletion of their natural resources from taxable income.

In the dissenting opinion for United States v. Biwabik Mining Company, it was argued that the government had no right to claim taxes from the mining company as they were not in possession of any tangible property or capital and their income was derived solely from labor and services. The dissenters believed that this taxation violated the 16th Amendment which allows Congress to levy an income tax without apportioning it among states or basing it on Census results. They contended that profits made by a corporation are essentially wages paid for labor, skill, and investment risk taken by shareholders who should be taxed individually rather than at a corporate level. Therefore, taxing corporations would amount to double taxation which is unjustifiable under constitutional law.