Thomas Welch and his father owned a grain brokerage business in Minnesota, which went bankrupt in 1922.

Benjamin N. Cardozo, delivering the Court's opinion, held that the expenses were too personal, were too bizarre to be ordinary, and were capital.

He did not consider them "ordinary and necessary business expenses" and, therefore, not deductible under Section 162 of the Internal Revenue Code.

This case is frequently cited for its dictum describing the meaning of the term "necessary" in Section 162 as requiring that expenses merely be "appropriate and helpful [in] the development of the [taxpayer's] business."

Cardozo submits that determining what constitutes a necessary expense can be enormously difficult: "life in all its fullness must supply the answer to the riddle."