The United States Supreme Court case, United States v. Equitable Life Assurance Society of the United States (1965), centered around a dispute over federal income tax deductions. The Equitable Life Assurance Society had claimed certain policyholder dividends as deductible business expenses on its federal income tax returns for 1949 and 1950. However, the Internal Revenue Service disallowed these deductions, arguing that they were essentially distributions of surplus to policyholders rather than ordinary and necessary business expenses under Section 23(a)(1)(A) of the Internal Revenue Code of 1939. The Supreme Court ruled in favor of the IRS, holding that such dividends could not be deducted as business expenses because they represented a return to policyholders on their premium payments rather than an expense incurred by Equitable in carrying out its insurance operations.

In the dissenting opinion for United States v. Equitable Life Assurance Society of the United States, Justice Harlan argued that the majority's decision to allow a tax deduction for policyholder dividends was inconsistent with previous court rulings and congressional intent. He contended that these dividends were not true refunds but rather reductions in premium costs, which should not be deductible under federal income tax law. Furthermore, he believed that allowing such deductions would give insurance companies an unfair advantage over other businesses by reducing their taxable income significantly. In his view, this interpretation distorted both statutory language and legislative history while also undermining sound principles of taxation fairness and neutrality.