In the case of United States v. Brims et al., 1926, the Supreme Court ruled on a dispute involving federal income tax law. The defendants, Brims and others, were shareholders in a corporation that had been dissolved and its assets distributed among them. The government argued that this distribution was essentially equivalent to dividends and should be taxed as such under federal law at the time. However, the defendants contended that since they received these distributions due to dissolution rather than from profits or surplus earnings of an ongoing business operation, it did not constitute taxable income. The Supreme Court sided with the defendants' interpretation of what constituted taxable income under existing laws. It held that when a company is liquidated and its assets are distributed amongst shareholders after paying off all debts and obligations; those distributions do not count as dividend income for taxation purposes because they are derived from capital investment returns instead of corporate profit or surplus earnings.

The dissenting opinion in the United States v. Brims et al., 1926 case argued that the majority's decision was a misinterpretation of the Volstead Act, which prohibited alcohol sales during Prohibition. The dissent believed that Congress intended to criminalize only those who knowingly sold alcoholic beverages, not individuals like Brims who were unaware they were selling alcohol due to its concealment within other products. They contended that this interpretation was more consistent with traditional principles of criminal law requiring intent for conviction and warned against expanding federal power too broadly at the expense of individual rights. Furthermore, they expressed concern about potential misuse or abuse by authorities if such broad interpretations are allowed without clear legislative guidance.