The case of White et al., Former Collectors of Internal Revenue, v. Winchester Country Club in 1941 revolved around the issue of taxation on social clubs. The Winchester Country Club was a non-profit organization that provided recreational facilities to its members and their guests but did not provide any services or goods to the general public. The club argued that it should be exempt from federal income tax as per Section 101(9) of the Revenue Act because it operated exclusively for pleasure, recreation, and other non-profit purposes. However, the Internal Revenue Service (IRS) disagreed with this interpretation and imposed taxes on the club's earnings from investments and rentals which were used for maintenance expenses. The U.S Supreme Court ruled in favor of Winchester Country Club stating that such revenues are incidental to its main purpose - providing recreational facilities - hence they do not constitute unrelated business taxable income under section 511(a)(2). Therefore, these revenues should also be considered exempt from federal income tax under Section 501(c)(7). This decision set an important precedent regarding how social clubs' incomes are taxed.

In the dissenting opinion for White et al., Former Collectors of Internal Revenue, v. Winchester Country Club, it was argued that the majority's interpretation of Section 501(c)(7) of the Internal Revenue Code was incorrect. The dissenting justices believed that social clubs should not be exempt from federal income taxes on their investment income simply because they are non-profit organizations. They contended that this exemption unfairly benefits wealthier individuals who can afford to join these exclusive clubs and enjoy tax-free investment returns while ordinary taxpayers bear a disproportionate share of the tax burden. Furthermore, they disagreed with the majority's view that Congress intended to grant such broad exemptions when it enacted Section 501(c)(7). Instead, they interpreted this provision as only applying to dues and fees directly related to a club's recreational activities rather than its unrelated business investments.