In the case of White v. Aronson (1937), the United States Supreme Court ruled in favor of Aronson, who had been charged with tax evasion by former collector White. The dispute arose from a discrepancy in how to calculate income taxes on profits made from selling stock options. While White argued that these should be taxed as ordinary income, Aronson contended they were capital gains and thus subject to lower rates. The court agreed with Aronson's interpretation, stating that under Section 117(a) of the Revenue Act of 1928, proceeds from selling or exchanging personal property are considered capital assets unless specifically excluded by law - which was not the case for stock options at this time.

In the dissenting opinion for White v. Aronson, Justice Cardozo disagreed with the majority's decision that a taxpayer could not deduct losses from sales of securities in a year different than when they were sold. He argued that this interpretation was too rigid and did not take into account the realities of financial transactions. According to him, it is often difficult or impossible to determine exactly when a loss has occurred due to fluctuations in market value and other factors beyond an individual's control. Therefore, he believed taxpayers should be allowed some flexibility in determining which tax year their losses fall under based on reasonable estimates rather than being forced to adhere strictly to calendar years.