Welch v. Helvering

After his former employer's grain business went bankrupt and discharged its debts, Welch (plaintiff), later working as a commission agent for a competing grain company, voluntarily repaid many of his former company's debts to rebuild relationships with old customers and strengthen his own credit and reputation; he deducted these repayments as ordinary business expenses, but the Commissioner (defendant) treated them as capital expenditures to build goodwill, and the Board of Tax Appeals and Court of Appeals agreed.