In the United States v. Kaiser case of 1959, the Supreme Court ruled on whether a taxpayer could deduct medical expenses for treatment at a clinic he had established and controlled. The petitioner, Henry J. Kaiser, sought to deduct from his gross income amounts paid by him into trusts created for providing medical care and hospitalization benefits to employees of companies in which he held significant interest. He also included himself and his wife as beneficiaries under these plans. The Commissioner of Internal Revenue disallowed these deductions arguing that they were not "ordinary and necessary" business expenses but rather personal living expenses. The Supreme Court upheld Mr.Kaiser's right to make such deductions stating that payments made by him into trust funds constituted ordinary and necessary business expense within meaning of section 23(a)(1)(A) of Internal Revenue Code even though petitioner was beneficiary under plan along with employees because it promoted employee health & welfare thereby benefiting his businesses indirectly.

In the dissenting opinion for United States v. Kaiser, Justice Brennan disagreed with the majority's interpretation of Section 107(a) of the Internal Revenue Code. He argued that this section should be read to allow deductions only for expenses incurred in restoring property to its original condition, not for improvements or enhancements made beyond that point. According to him, allowing such deductions would result in a windfall for taxpayers at the expense of other citizens who must make up the shortfall in tax revenue. Furthermore, he contended that it was Congress' intent when drafting Section 107(a) to limit these types of deductions and prevent abuse by unscrupulous taxpayers seeking undue benefits from public funds.