In the case of United States v. Zacks et ux., the Supreme Court ruled on a tax dispute involving capital gains from property sales. The Zack family sold two properties and reported their profits as long-term capital gains, which are taxed at a lower rate than regular income. However, the Internal Revenue Service (IRS) disagreed with this classification, arguing that because Mr. Zacks was in the real estate business, these were ordinary income and should be taxed at a higher rate. The Tax Court sided with the IRS but upon appeal to Sixth Circuit court reversed this decision stating that since he did not hold himself out to others as being engaged in selling real estate nor did he devote much time or effort to it; hence his activity could not be considered trade or business under section 117(j). This led IRS to escalate matter before Supreme Court where they affirmed Sixth Circuit's ruling by noting that Congress intended for "trade or business" in Section 117(j) of Internal Revenue Code of 1939 (now Section 1231) requires more active engagement than what Mr.Zack had shown.

The dissenting opinion in the United States v. Zacks case argued that the majority's decision to uphold a tax assessment on an amount received by taxpayers from their corporation was incorrect. The dissenters believed that this sum should not be considered as taxable income, but rather as a return of capital. They contended that when shareholders receive money from their own company, it is essentially just them getting back part of what they initially invested and thus should not be taxed again. This perspective emphasizes the importance of considering substance over form in tax matters - looking at the real nature and effect of transactions rather than merely their formal structure or label - which they felt was overlooked by the majority ruling.