In the case of Von Baumbach, Collector of Internal Revenue v. Sargent Land Company (1916), the U.S. Supreme Court was tasked with determining whether a tax assessment on a corporation's capital stock was constitutional under the 16th Amendment. The Sargent Land Company argued that this tax violated their rights as it included property owned by shareholders and not just corporate assets, thereby constituting double taxation. However, the court ruled in favor of Von Baumbach, upholding that such taxes were indeed constitutional under the 16th Amendment which allows Congress to levy income taxes without apportionment among states or regard to census data. The court reasoned that corporations are separate entities from their shareholders and thus can be taxed independently; any impact on shareholder wealth is indirect and does not constitute double taxation.

The dissenting opinion in the case of Von Baumbach v. Sargent Land Company disagreed with the majority's interpretation of tax law, arguing that it was not Congress' intention to allow for double deductions on income taxes. The dissent argued that allowing a taxpayer to deduct both depreciation and interest payments on an indebtedness incurred for the purchase of property would result in a windfall for taxpayers at the expense of public revenue. This view held that such an arrangement would be contrary to sound policy and principles of taxation, as well as potentially leading to abuses by savvy taxpayers seeking ways around their obligations. Furthermore, they contended that if Congress had intended this outcome, they would have explicitly stated so within legislation rather than leaving it up to judicial interpretation.