In the case of Commissioner of Internal Revenue v. Hansen et ux., the Supreme Court ruled in favor of the Hansens, a married couple who had claimed deductions on their income tax for losses incurred from renting out part of their home. The IRS argued that these were not legitimate business expenses because they did not meet certain criteria outlined in Section 23(a)(1)(A) and (e) and Section 24(c) of the Internal Revenue Code. However, it was determined by Justice Brennan that since there was no evidence to suggest any personal use or enjoyment derived from this rental activity, it could be considered as being engaged in for profit under section 23(e). Therefore, all ordinary and necessary expenses paid or incurred during taxable year in carrying on such trade or business are deductible under section 23(a)(1)(A), including an appropriate portion of rent and other overhead expenses attributable thereto.

In the dissenting opinion for Commissioner of Internal Revenue v. Hansen et ux., Justice Brennan disagreed with the majority's interpretation of Section 107(a) and (b) of the Internal Revenue Code, arguing that it was not Congress' intention to exclude from gross income only a portion of rental allowance paid to ministers as part of their compensation. He contended that this exclusion should apply to all housing allowances received by clergy members, regardless if they exceed fair rental value or not. He also argued against the Court’s decision on procedural grounds, stating that it had exceeded its jurisdiction in deciding an issue which was not presented in lower courts nor briefed or argued before them. Furthermore, he criticized how his colleagues applied tax law principles inconsistently when interpreting different sections within same code provision - treating some parts literally while disregarding literal meaning elsewhere.