In the case of Randall et al. v. Loftsgaarden et al., 1985, the Supreme Court ruled on a dispute involving tax deductions and securities fraud. The plaintiffs had invested in a limited partnership that was promoted as providing significant tax benefits but later found to be fraudulent, leading them to lose their claimed tax deductions. They sued under Section 10(b) of the Securities Exchange Act and Rule 10b-5 for damages equivalent to their lost deductions plus interest. The issue before the court was whether these investors could recover not only what they paid for their investment but also an amount equal to any anticipated income-tax advantages that were promised by defendants but disallowed by IRS due to fraudulence. The Supreme Court held that while victims of securities fraud can seek compensation for actual monetary losses suffered as a result of fraudulent activity, they cannot claim damages based on potential or expected benefits such as unfulfilled tax advantages from investments which turned out illegal or non-compliant with IRS rules.

In the dissenting opinion for Randall et al. v. Loftsgaarden et al., Justice Powell, joined by Chief Justice Burger and Justices Rehnquist and O'Connor, disagreed with the majority's interpretation of Section 28(a) of the Securities Act of 1933. They argued that this section should not be interpreted to allow a plaintiff to recover both rescissionary damages (returning parties to their pre-contractual position) and an additional amount equal to any income tax benefits received from investment in a fraudulent security offering. The dissenters believed that such an interpretation would lead to excessive recovery beyond what is necessary for compensation, thereby creating unjust enrichment at the expense of defendants who may have acted without intent or knowledge of wrongdoing. They also expressed concern about potential negative impacts on legitimate business transactions due to increased litigation risks.