In the case United States v. Foster Lumber Co., Inc., 1976, the Supreme Court dealt with a dispute over timber rights on land that was originally owned by Native Americans but had been sold to private parties. The issue at hand was whether or not the government retained an implied reservation of timber rights when it transferred ownership of these lands to non-Native American owners under statutes designed to encourage settlement and development in Oregon and California. The court ruled against Foster Lumber Company, holding that there were no reserved timber rights for the U.S Government in such cases unless explicitly stated in the deed or patent transferring ownership. This decision clarified property law regarding reservations of resources on previously federally-owned land, establishing precedent for future disputes involving similar circumstances.

The dissenting opinion in the case of United States v. Foster Lumber Co., Inc. argued that the majority's decision to uphold a tax assessment against Foster Lumber was flawed due to an incorrect interpretation of the Internal Revenue Code. The dissent contended that, under Section 631(a) of the code, timber should be treated as a capital asset and not ordinary income when it is cut for sale or use in business operations by its owner. They believed this provision applied regardless if there was an agreement between parties about cutting and selling timber before it was severed from land owned by taxpayer (Foster). Therefore, they disagreed with majority’s view which held such pre-cutting agreements would make proceeds taxable as ordinary income rather than capital gains. This disagreement stemmed from differing interpretations on whether these transactions were sales or exchanges qualifying for capital gain treatment under section 1231(b)(2)(A), hence affecting their taxation category.