In the case of American Bond and Mortgage Company et al. v. United States, 1930, the Supreme Court ruled in favor of the U.S government regarding a dispute over tax deductions claimed by two corporations for losses incurred through worthless securities. The companies argued that they should be allowed to deduct these losses from their income taxes under Section 234(a)(5) of the Revenue Act of 1918 because they were "losses sustained during the taxable year and not compensated for by insurance or otherwise." However, it was determined that this provision did not apply as it only covered physical loss or damage rather than financial depreciation. Furthermore, another section (214(a)(5)) specifically addressed deduction for worthless securities but required declaration within thirty days after close of fiscal year which wasn't followed by either corporation. Therefore, both corporations' claims were denied due to non-compliance with statutory requirements.

In the dissenting opinion for the American Bond and Mortgage Company et al. v. United States case, Justice Stone argued that the government did not have a valid claim to tax refunds from corporations under Section 280 of the Revenue Act of 1926. He contended that this section was intended to prevent double taxation on shareholders and should not be used as a means for the government to reclaim taxes already refunded to corporations due to overpayment or error in assessment. Furthermore, he believed it was unjust for companies who had acted in good faith and followed existing laws at their time of operation, only later finding themselves subject to retroactive legislation which demanded they return these funds back into federal coffers. This interpretation would result in an unfair financial burden placed upon those businesses affected by such rulings.