In the case of Choate v. Commissioner of Internal Revenue in 1944, the U.S Supreme Court ruled on a dispute regarding estate tax law. The issue at hand was whether or not certain payments made to Mrs. Choate by her late husband's trust were subject to federal estate taxes after his death. The IRS argued that these payments should be taxed because they were essentially part of Mr. Choate’s gross estate, while Mrs.Choate contended that they were gifts and thus exempt from taxation. The court sided with the IRS, ruling that since Mr.Choate had retained control over how much income would go into the trust during his lifetime and could alter beneficiaries as he wished, it constituted an "incident of ownership" under existing tax laws - meaning it was still effectively part of his property even though technically held in trust for someone else (in this case, Mrs.Choate). Therefore, any distributions from such a trust after Mr.Choates' death are considered part of his taxable estate rather than non-taxable gifts.

In the dissenting opinion for Choate v. Commissioner of Internal Revenue, Justice Jackson disagreed with the majority's interpretation of tax law as it pertained to gifts and trusts. He argued that a gift should be considered complete when there is no longer any dominion or control over it by the donor. In this case, he believed that Mrs. Choate had given up all control over her trust income once she assigned it to her children and thus, should not be taxed on this income. According to him, taxing Mrs.Choate would amount to double taxation since both she and her children were being taxed on the same income from the trust fund - an outcome he viewed as unfair under existing tax laws.