In the 1951 case Thompson, Trustee, Missouri Pacific Railroad Co. v. United States et al., the U.S Supreme Court ruled in favor of the United States government and against Missouri Pacific Railroad Company's trustee, Thompson. The issue at hand was whether or not a railroad company could claim deductions for federal income tax purposes based on depreciation of its properties that were leased to another company during World War II by order of the U.S government under wartime regulations. The court held that since there had been no change in ownership or possession rights over these properties despite their use by other companies during war time, they remained assets subject to depreciation and hence eligible for tax deduction claims by their original owner - Missouri Pacific Railroad Company.

In the dissenting opinion for Thompson, Trustee, Missouri Pacific Railroad Co. v. United States et al., Justice Jackson disagreed with the majority's interpretation of Section 77 of the Bankruptcy Act and its application to this case. He argued that it was not Congress' intention to allow a reorganization plan under Section 77 to be used as an instrument for evasion or delay in paying taxes due by a railroad company undergoing reorganization. According to him, such an interpretation would undermine tax laws and create inequities between taxpayers who are able to use bankruptcy proceedings as a shield against their tax obligations and those who cannot do so because they are not involved in any bankruptcy proceedings. Furthermore, he contended that allowing such practices could potentially lead other corporations into seeking refuge under Section 77 merely as a means of evading or delaying their own tax liabilities.