In the United States v. Habig et al., 1967, the Supreme Court dealt with a tax dispute involving two corporations and their shareholders. The case centered around Section 337 of the Internal Revenue Code which allows for non-recognition of gain or loss from sales made by a corporation during its final taxable year if it is in complete liquidation. The court had to determine whether this provision applied when assets were sold after adoption of a plan of liquidation but before formal dissolution. In an unanimous decision, the Supreme Court held that such transactions did qualify under Section 337 as long as they occurred within twelve months following adoption of a plan for complete liquidation and all steps necessary to dissolve were taken within those twelve months.

In the dissenting opinion for United States v. Habig et al., Justice Harlan disagreed with the majority's interpretation of Section 1235(a) of the Internal Revenue Code, which concerns capital gains tax on timber sales. He argued that this section should not be read in isolation but rather in conjunction with other relevant sections of the code to determine legislative intent. In his view, Congress intended for taxpayers to have a choice between treating timber as capital assets or ordinary income property depending upon their individual circumstances and business needs. By interpreting Section 1235(a) narrowly, he believed that the majority was denying taxpayers this flexibility and imposing an undue burden on them by requiring them to pay higher taxes than they would otherwise owe under a broader reading of these provisions.