The U.S. Supreme Court case Helvering, Commissioner of Internal Revenue v. F & R Lazarus & Co., 1939 revolved around the issue of tax deductions for losses incurred by a corporation due to stock depreciation in its subsidiary companies. The respondent, F&R Lazarus & Co., had claimed such deductions on their federal income tax returns which were disallowed by the petitioner, Commissioner of Internal Revenue (Helvering). The Board of Tax Appeals and Circuit Court sided with Lazarus but upon reaching the Supreme Court, it was ruled that these losses could not be deducted as they did not fall under 'bad debts' or 'worthless securities'. Instead, they were considered capital investments subject to risk and thus non-deductible from gross income according to Section 23(g) and (k) respectively of the Revenue Act 1928. This decision reversed previous judgments favoring Lazarus.

In the dissenting opinion for Helvering v. F. & R. Lazarus & Co., Justice Black argued that the majority's decision was inconsistent with previous rulings and interpretations of tax law, particularly in relation to deductions for losses incurred during business operations. He contended that allowing a taxpayer to deduct from gross income any loss sustained during the taxable year is contrary to existing laws which only permit such deductions if they are directly connected with trade or business activities conducted within the United States. Furthermore, he asserted that this interpretation could potentially open up loopholes in taxation regulations by enabling businesses to claim deductions on losses unrelated to their core operations or those occurring outside U.S borders, thereby undermining revenue collection efforts and distorting economic incentives.