In the 1942 case of Helvering, Commissioner of Internal Revenue v. Sabine Transportation Co., Inc., the United States Supreme Court ruled in favor of Sabine Transportation Company. The company had deducted from its gross income a sum representing depreciation on barges and tugboats that were destroyed during their lease to the French government during World War I. The IRS argued that this was not permissible as it resulted in no loss to the taxpayer because they received full compensation for their property's destruction through insurance proceeds and war risk insurance underwritten by U.S Government. However, Justice Stone writing for majority held that even though there was reimbursement for lost assets, it did not negate or offset depreciation deductions taken before those losses occurred since these are separate transactions with different tax implications.

The dissenting opinion in the case of Helvering v. Sabine Transportation Co., Inc., argued that the majority's decision to allow depreciation deductions for vessels constructed during World War I was incorrect. The dissenters believed that these ships, which were built with government aid and later sold at a profit, should not be eligible for such tax benefits. They contended that allowing these deductions would result in an unfair advantage for certain businesses and could potentially lead to abuse of the tax system. Furthermore, they disagreed with the majority's interpretation of relevant statutes and legislative history related to wartime ship construction and subsequent sales transactions.