In the case of Commissioner of Internal Revenue v. Lincoln Savings & Loan Association, 1970, the U.S Supreme Court ruled in favor of Lincoln Savings & Loan Association. The issue at hand was whether premiums paid by a savings and loan association to a state mutual insurance fund were deductible business expenses under section 162(a) of the Internal Revenue Code or non-deductible capital expenditures under section 263. The court held that these payments were indeed ordinary and necessary business expenses as they were required by California law for doing business in that state and thus could be deducted from federal income tax liability. This decision clarified how certain types of mandatory insurance contributions should be treated for tax purposes.

In the dissenting opinion for Commissioner of Internal Revenue v. Lincoln Savings & Loan Assn., Justice Harlan disagreed with the majority's interpretation of Section 593 of the Internal Revenue Code, arguing that it was not intended to provide savings and loan associations a double tax benefit. He contended that Congress had only meant to allow these institutions a reasonable addition to their bad debt reserves each year, which would be deductible from gross income, but not an additional deduction when actual losses were sustained. The majority's decision effectively allowed such institutions both deductions - one when amounts were added to reserve and another when losses were charged against those reserves. This interpretation, according to Justice Harlan, resulted in a significant revenue loss for the government and went beyond what he believed was Congress' intent in creating this provision.