In the case of Commissioner of Internal Revenue v. Idaho Power Co., 1973, the U.S. Supreme Court ruled that a taxpayer must capitalize and depreciate over time the cost of its own labor and equipment used in construction projects rather than deducting these costs as current business expenses. The Idaho Power Company had been constructing transmission lines while also using them for their regular operations, arguing that they should be able to deduct from their taxes both direct costs (materials) and indirect costs (labor). However, the IRS disagreed with this interpretation of tax law. The court sided with the IRS on a 6-1 decision stating that because these were capital expenditures which provided long-term benefits to Idaho Power Company, they could not be deducted as ordinary business expenses but instead needed to be capitalized and depreciated over time.

In the dissenting opinion for Commissioner of Internal Revenue v. Idaho Power Co., Justice Blackmun argued that construction equipment used by a utility company in the process of improving its facilities should not be considered as "property used in the trade or business" under Section 167 of the Internal Revenue Code, and therefore, it should not be eligible for depreciation deductions. He contended that this interpretation was consistent with legislative intent and prior court rulings which had limited such deductions to properties directly involved in income production. According to him, allowing such broad interpretations would open up possibilities for abuse where businesses could claim tax benefits on virtually any property indirectly related to their operations. Furthermore, he pointed out that Congress had already provided investment credits for these types of assets separately from depreciation allowances; thus implying they did not intend them to also qualify under Section 167.