In the case National Muffler Dealers Association, Inc. v. United States (1978), the U.S Supreme Court was tasked with determining whether a trade association could deduct payments made to a retirement plan for its employees under Section 162(a) of the Internal Revenue Code. The court held that in order for an expense to be deductible as "ordinary and necessary," it must satisfy both terms independently; being ordinary refers to common or frequent occurrence in the type of business involved, while necessary implies appropriateness and helpfulness towards carrying out business operations. In this context, it found that contributions made by National Muffler Dealers Association were not 'ordinary' because they were contingent on profits rather than fixed amounts, which is unusual practice among businesses generally. Therefore, these contributions weren't tax-deductible expenses under Section 162(a). This decision clarified how courts should interpret statutory language when applying tax law.

The dissenting opinion in the National Muffler Dealers Association, Inc. v. United States case argued that the majority's decision to uphold the validity of a Treasury Regulation was incorrect because it failed to consider whether or not Congress had intended for such regulations to be applied retroactively. The dissent pointed out that there were no clear indications from Congress suggesting this intent and thus, applying these regulations retroactively could potentially lead to unjust results for taxpayers who had relied on previous interpretations of tax laws when making business decisions. Furthermore, they disagreed with the majority's reliance on Chevron deference - which gives broad discretion to administrative agencies in interpreting ambiguous statutes - arguing instead that courts should play a more active role in reviewing agency actions and ensuring their consistency with Congressional intent.