In the 1943 case Commissioner of Internal Revenue v. Heininger, Dr. Ernst Heininger was denied a tax deduction by the IRS for legal expenses he incurred while fighting against an order from the Postmaster General that barred him from using postal services due to alleged fraudulent activities in his dental practice. The Supreme Court ruled in favor of Dr. Heininger, stating that these legal costs were ordinary and necessary business expenses under Section 23(a) of the Revenue Act of 1936 and thus deductible on his income tax return. The court reasoned that there is no requirement for a taxpayer's business operation to be lawful or successful to qualify such expenditures as deductible; it only needs to be legitimate with profit-making intention at its core.

In the dissenting opinion for Commissioner of Internal Revenue v. Heininger, Justice Robert H. Jackson disagreed with the majority's decision to allow business expenses deductions related to litigation costs under Section 23(a) of the Revenue Act. He argued that such a broad interpretation could potentially open up avenues for tax evasion and avoidance by unscrupulous taxpayers who might manipulate their financial affairs in order to claim unwarranted deductions. Furthermore, he contended that it was not Congress' intent when drafting this section of the law to permit such wide-ranging deductibility of legal fees as ordinary and necessary business expenses, especially those arising from defending against allegations of fraudulent conduct or illegal activities which are fundamentally inconsistent with normal business operations.