In the case of Helvering, Commissioner of Internal Revenue v. Northern Coal Co., the U.S Supreme Court was tasked with determining whether or not a coal company could deduct from its gross income the cost of mining equipment that it had purchased and subsequently abandoned once a mine was exhausted. The court ruled in favor of Helvering, stating that such costs were capital expenditures rather than ordinary and necessary business expenses. This meant they should be depreciated over time rather than deducted all at once from gross income for tax purposes. The ruling clarified how businesses should account for certain types of investments when calculating their taxable incomes.

In the dissenting opinion for Helvering v. Northern Coal Co., Justice Stone argued that the majority's interpretation of tax law was incorrect and overly broad. He contended that Congress intended to levy taxes on net income, not gross income, and thus deductions should be allowed for expenses incurred in earning taxable income. In this case, he believed that the coal company should have been able to deduct its mining royalties from its taxable income because they were a necessary business expense directly related to producing revenue. The majority's ruling against such deductions would result in an unfair burden on businesses by taxing them more heavily than individuals or other entities with similar incomes but fewer operating costs. Furthermore, Justice Stone warned that this decision could set a dangerous precedent by giving too much power to tax authorities at the expense of taxpayers' rights.