The U.S. Supreme Court case Atlantic Mutual Insurance Company v. Commissioner of Internal Revenue in 1997 revolved around the issue of tax deductions for insurance companies. The court had to decide whether an insurance company could deduct from its taxable income the full amount it set aside for future policyholder dividends, or only the portion actually paid out to policyholders during that year. The IRS argued that only amounts paid should be deductible, while Atlantic Mutual contended that all funds reserved for such purposes should be considered as a deduction under Section 809 of the Internal Revenue Code which allows mutual life insurance companies to partially deduct their 'policyholder dividends'. In a unanimous decision, Justice Ruth Bader Ginsburg delivered the opinion stating that an insurer may not take into account unpaid estimated future dividends when calculating its deduction but rather can only deduct actual payments made within any given year.

In the dissenting opinion for Atlantic Mutual Insurance Company v. Commissioner of Internal Revenue, Justice Ginsburg disagreed with the majority's interpretation of tax law and its application to insurance companies' loss reserve discounting practices. She argued that the majority's decision was based on a misunderstanding or misinterpretation of Congress’s intent when it enacted relevant provisions in 1986 Tax Reform Act. According to her, these provisions were designed to prevent insurance companies from taking excessive deductions for unpaid losses by requiring them to "discount" their reserves (i.e., reduce them) according to prescribed interest rates and loss payment patterns. However, she contended that this did not mean they should be denied any deduction at all if they overstate their reserves in one year but understate them in another within same taxable year as per IRS calculations which is what happened with Atlantic Mutual Insurance Company case leading it towards additional tax liability unjustly.