In the case of United States v. F. & M. Schaefer Brewing Co., the Supreme Court was tasked with determining whether or not a tax deduction could be claimed by a brewery for beer that had been brewed but never sold due to spoilage during World War II, when there were restrictions on grain use and brewing capacity imposed by the federal government's war-time regulations. The Internal Revenue Service (IRS) denied Schaefer Brewing Company's claim for deductions based on these losses, arguing that they did not constitute an actual loss under Section 23(e)(2) of the Internal Revenue Code because no sale had taken place. The Supreme Court ruled in favor of Schaefer Brewing Co., stating that it was entitled to deduct from its gross income any amount representing unsalable beer as this constituted an actual loss under Section 23(e)(2). The court reasoned that since breweries are taxed upon removal of their product for consumption or sale rather than at point-of-sale, spoiled beer represents a real economic loss regardless if it is sold or not.

The dissenting opinion in the United States v. F. & M. Schaefer Brewing Co., 1957 case argued that the majority's decision to uphold a tax on beer produced and sold within New York State was inconsistent with previous rulings of the Court, particularly those relating to interstate commerce laws. The dissent contended that this ruling effectively allowed for double taxation by both state and federal governments, which they believed contradicted established principles of fair taxation under U.S law. They also expressed concern about potential negative impacts on businesses due to increased financial burdens from such taxes, arguing it could potentially discourage domestic production and trade activities.