In the case of United States v. American Bar Endowment et al., 1985, the Supreme Court ruled that payments made by members of a non-profit organization for insurance coverage could not be considered tax-deductible charitable contributions if they were more than what such coverage would typically cost. The American Bar Endowment (ABE) offered life and health insurance to its members, who paid premiums in excess of their actual cost. ABE then used these surplus funds for charitable purposes related to legal education and research. Some members claimed these overpayments as deductions on their federal income taxes under section 170(c) of the Internal Revenue Code which allows deductions for "charitable contributions". However, the IRS denied these claims arguing that there was no gift or donation involved since policyholders received full value through their insurance policies. The Supreme Court agreed with this argument stating that a payment can only qualify as a deductible contribution when it voluntarily transfers money without receiving adequate consideration in return - something not applicable here because policyholders received substantial benefits from their policies.

In the dissenting opinion for United States v. American Bar Endowment, Justice Blackmun argued that the majority's decision was a departure from established precedent and an unnecessary intrusion into Congress' domain. He contended that the Court had traditionally deferred to Congress in matters of tax policy and should have done so in this case as well. The justice believed that by deciding whether or not certain insurance premiums were deductible, the Court was essentially making a legislative judgment about what constitutes "income," which is something he felt should be left up to lawmakers. Furthermore, he disagreed with the majority's interpretation of section 162(a) of Internal Revenue Code, arguing it did not support their conclusion regarding charitable contributions deductions.