The U.S. Supreme Court case Lucas v. Kansas City Structural Steel Company in 1929 revolved around the issue of tax deductions for losses incurred by a corporation due to its sale of assets, specifically bonds and stocks. The Kansas City Structural Steel Company had sold these assets at a loss and claimed this as a deduction on their federal income tax return under Section 234(a)(4) of the Revenue Act of 1918, which allowed for such deductions if they were "incurred in trade or business." However, Commissioner Guy T. Helvering (then known as David H. Blair) disallowed these claims arguing that the losses did not occur within regular operations but from capital investments instead. The Supreme Court ruled against the Internal Revenue Service (IRS), stating that even though buying and selling securities was not part of the company's usual line of work, it was still an ordinary operation because businesses often invest surplus funds into securities until needed for operational purposes; thus making any resulting losses deductible under existing law.

In the dissenting opinion for Lucas v. Kansas City Structural Steel Company, Justice Stone argued that the majority's interpretation of Section 234(a)(4) of the Revenue Act was incorrect. He believed that Congress intended to allow deductions for losses only when they were actually sustained during a taxable year and not merely because there was an anticipated future loss due to contractual obligations. The majority’s decision allowed companies to deduct from their taxes any potential future losses, which he felt was against Congressional intent and could lead to abuse by corporations seeking tax advantages. Furthermore, he disagreed with the idea that a corporation should be able to claim a deduction based on an estimated loss in value without having sold or disposed of its assets first.