In the case of Commissioner of Internal Revenue v. First Security Bank of Utah, N.A., et al., 1971, the U.S Supreme Court was tasked with deciding whether interest paid on funds borrowed by a bank to purchase tax-anticipation bills should be deductible as business expenses under Section 265(2) of the Internal Revenue Code. The court ruled in favor of First Security Bank, holding that such interest is indeed deductible. This decision overturned an earlier ruling by the Tax Court which had sided with the Commissioner's argument that these were not ordinary and necessary business expenses but rather costs associated with carrying tax-exempt obligations. The Supreme Court disagreed stating that banks' primary function is dealing money and thus borrowing for purchasing government securities falls within their regular course of operations making it an ordinary expense.

In the dissenting opinion for Commissioner of Internal Revenue v. First Security Bank of Utah, N.A., Justice Blackmun disagreed with the majority's interpretation of Section 166(d) of the Internal Revenue Code. He argued that this section was intended to apply only to non-business bad debts and not business-related ones as interpreted by the majority. The justice believed that Congress had made a clear distinction between business and non-business bad debts in its legislation, which should be respected by courts interpreting it. Furthermore, he contended that banks' loan losses were an inherent part of their regular course of business and thus should fall under "business" rather than "non-business" category for tax purposes. Therefore, according to him, such losses ought to be fully deductible from gross income instead being treated as short-term capital loss under Section 166(d). In his view, this would better reflect economic realities faced by banking institutions while also aligning with legislative intent behind relevant provisions in tax law.