In the case of United States v. Atlas Life Insurance Co., 1964, the Supreme Court examined whether a life insurance company could deduct from its taxable income amounts set aside as reserves for future policyholder dividends. The Internal Revenue Code allowed such deductions only if they were required by state law or regulation. Atlas argued that Oklahoma law implicitly mandated these reserves because it prohibited insurers from operating in an unsound manner and required them to maintain sufficient assets to cover their liabilities, including future dividend payments. However, the government contended that this was not enough to meet the statutory requirement for a specific mandate under state law or regulation. The Supreme Court sided with the government's interpretation and held that general requirements for financial soundness did not equate to specific mandates requiring reserve funds be set aside for future dividends. Therefore, Atlas could not deduct these amounts from its taxable income under federal tax laws.

In the dissenting opinion for United States v. Atlas Life Insurance Co., it was argued that the majority's decision to allow insurance companies to deduct policyholder dividends from their gross income before calculating federal taxes contradicted established tax law and precedent. The dissenters believed that these dividends should be considered as part of an insurer's profit, not a business expense, and therefore should be taxable. They pointed out that allowing such deductions could lead to significant revenue losses for the government since all insurers would likely adopt this practice if allowed by court ruling. Furthermore, they contended that it is Congress' role - not the Court’s - to make changes in tax laws if deemed necessary or beneficial.