In the 1935 case United States v. Halsey, Stuart & Co., Inc. et al., the Supreme Court of the United States addressed an issue related to tax law and corporate bonds. The defendants were a group of corporations that had issued their own bonds during World War I at high interest rates due to wartime inflation. After the war ended and deflation set in, these companies sought to buy back their own bonds at lower prices on the open market rather than paying off bondholders directly as per contract terms which would have been more expensive for them due to higher face value of those bonds. The government argued that this practice resulted in taxable income for these corporations because they essentially made profit by buying back their debt cheaply; however, defendants contended it was not income but capital transaction hence non-taxable under applicable laws then. The Supreme Court sided with defendant corporations ruling that such transactions did not constitute taxable income under existing federal tax law since there was no actual or constructive receipt of money or property readily convertible into cash involved here but merely reduction in liabilities.

The dissenting opinion in the case of United States v. Halsey, Stuart & Co., Inc. et al., 1935 argued that the majority's decision was a misinterpretation of the statutory language and an overreach of judicial power. The dissenters believed that Congress did not intend to include underwriting syndicates within its definition of "underwriters" as used in Section 22(a) of the Securities Act, which would make them liable for false statements made by issuers they represent. They pointed out that such syndicates are merely intermediaries between issuers and investors, with no control over or responsibility for issuer statements; thus it is unjust to hold them accountable for any inaccuracies therein. Furthermore, they contended that this interpretation could have far-reaching negative effects on securities markets by discouraging participation in underwriting syndicates due to increased liability risks.