In the case of Van Wart v. Commissioner of Internal Revenue (1934), the United States Supreme Court was tasked with determining whether or not a taxpayer could deduct losses from sales of stock as ordinary losses, rather than capital losses. The petitioner, Mr. Van Wart, had sold stocks at a loss and claimed these as ordinary deductions on his income tax return for 1929. However, the Commissioner of Internal Revenue disagreed with this classification and determined that they were capital losses instead - which would limit their deductibility under existing tax law. The crux of the dispute centered around whether or not Mr. Van Wart's activities constituted him being in trade or business as a dealer in securities during 1929; if so, he would be entitled to treat his stock sale losses as ordinary ones. Upon review by both lower courts and ultimately reaching the Supreme Court level, it was ruled that despite having made numerous transactions throughout 1929 involving large amounts of money and even maintaining an office for such purposes – there wasn't enough evidence to suggest that Mr.Van Wart engaged in these activities with continuity and regularity necessary to constitute carrying on a trade or business. Therefore,the court upheld prior rulings stating that these were indeed capital losses limiting their deduction value.

In the dissenting opinion for Van Wart v. Commissioner of Internal Revenue, it was argued that the majority's interpretation of "income" under Section 22(a) of the Revenue Act was too broad and inconsistent with previous court rulings. The dissenting justices believed that a taxpayer's gross income should not include money received from selling property unless there is a gain or profit realized from such sale. They contended that in this case, where Mr. Van Wart sold his home at less than its cost price to pay off mortgage debt, he did not realize any gain or profit; instead, he suffered a loss because he sold his house for less than what it had cost him originally. Therefore, they disagreed with the majority’s decision to tax Mr.Van Wart on funds used solely to discharge an existing liability rather than as personal enrichment.