In the case of United States v. Ohio Power Co., 1956, the Supreme Court ruled on whether or not a utility company could deduct from its federal income tax certain state taxes that were paid under protest and later refunded. The Ohio Power Company had been paying gross receipts taxes to several states under protest while litigation was pending regarding their constitutionality. When these taxes were eventually declared unconstitutional and refunded, the power company sought to amend previous years' federal tax returns in order to claim deductions for those payments. The Internal Revenue Service denied this request, leading to legal action by Ohio Power. The Supreme Court held that since the taxpayer had a reasonable expectation of ultimately recovering the protested state taxes when they were paid, they did not constitute deductible expenses for federal income tax purposes at that time. Therefore, even though these funds were tied up during litigation and unavailable for use by Ohio Power Co., it was correct for them not be treated as losses until it became clear they would not be recovered.

In the dissenting opinion for United States v. Ohio Power Co., it was argued that the majority's decision to allow federal taxation on property used by state-regulated utilities contradicts previous court rulings and undermines states' rights. The dissenters believed that this tax would interfere with a state's ability to regulate its own public utilities, as it could potentially increase costs for consumers or decrease profits for utility companies. They also pointed out that such taxes had previously been ruled unconstitutional when they interfered with a company’s ability to provide affordable services, which is often a requirement of their operating agreements within individual states. Furthermore, they expressed concern about the potential implications of allowing federal intrusion into areas traditionally controlled by state governments.