In the case of United States v. Moorman et al., the Supreme Court examined whether a business could deduct from its gross income, for federal tax purposes, payments made to its employees as part of a profit-sharing plan. J.W. Moorman & Son had established such a plan in 1943 and sought to deduct these payments on their tax returns for that year and subsequent years. The Internal Revenue Service (IRS) disallowed these deductions, arguing they were not ordinary or necessary business expenses under Section 23(a)(1)(A) of the Internal Revenue Code because they were contingent upon profits and thus akin to dividends rather than wages or salaries. The Supreme Court ruled against Moorman, upholding IRS's decision by stating that while profit-sharing plans can be beneficial tools for businesses in motivating employees and aligning their interests with those of the company, this does not automatically make contributions towards them deductible as ordinary business expenses under existing tax law.

In the dissenting opinion for United States v. Moorman et al., Justice Jackson disagreed with the majority's ruling that a tax assessment is not a claim within the meaning of Section 17, sub. a (1) of Bankruptcy Act. He argued that this interpretation was inconsistent with both legislative history and previous court decisions which had recognized tax assessments as claims under bankruptcy laws. Furthermore, he contended that such an interpretation would unfairly burden taxpayers who are unable to pay their taxes due to financial hardship or insolvency by denying them relief through bankruptcy proceedings. This could potentially lead to situations where insolvent taxpayers are perpetually indebted to the government without any means of discharging their debt, contrary to one of the fundamental purposes of bankruptcy law - providing debtors with an opportunity for fresh start.