In the 1938 case of Helvering, Commissioner of Internal Revenue v. Chester N. Weaver Co., the U.S Supreme Court ruled in favor of the government regarding a tax dispute with Chester N. Weaver Co., an ice cream manufacturer and distributor based in Pennsylvania. The company had claimed deductions for business expenses related to its distribution trucks on its federal income tax returns from 1926-28 but was denied by the IRS commissioner Guy T. Helvering who argued that these were capital expenditures not deductible under Section 234(a)(1) of Revenue Act (1926). The court agreed with Helvering's interpretation, stating that such costs should be considered as capital investments rather than ordinary and necessary business expenses because they resulted in significant benefits extending beyond one year for the company - thus making them non-deductible according to existing laws at that time.

In the dissenting opinion for Helvering v. Chester N. Weaver Co., Justice Butler argued that the majority's interpretation of Section 113(a)(6) and (8) of the Revenue Act was incorrect, asserting that these sections should not be read as allowing a taxpayer to deduct from gross income an amount equal to its stock basis in a liquidated subsidiary corporation. He contended that such an interpretation would result in double deductions, which he believed Congress did not intend when drafting this legislation. Furthermore, he disagreed with the majority's view on how "earnings or profits" should be defined under Section 115(c), arguing instead for a more literal reading of this provision based on established accounting principles rather than legislative intent inferred by judicial construction.