In the case of Colgate, Administrator v. United States in 1929, the Supreme Court ruled on a dispute over estate taxes. The decedent had transferred securities to his wife without consideration before he died and it was argued that these should not be included in his gross estate for tax purposes. However, the court held that since there was no bona fide sale and because control over those assets remained with him until death (as they were subject to demands by creditors), they should indeed be considered part of his taxable estate under Revenue Act of 1918. This decision established an important precedent regarding how transfers made shortly before death are treated for tax purposes.

In the dissenting opinion for Colgate v. United States, Justice Stone argued that the majority's interpretation of Section 3466 of the Revised Statutes was too broad and inconsistent with its original intent. He contended that this statute should only apply to cases where a debtor is insolvent or in danger of insolvency at the time when preferential payments are made, not to all situations where a debtor makes a payment while being indebted to the government. In his view, applying this law indiscriminately could lead to unjust results and discourage honest debtors from paying their debts promptly. Furthermore, he pointed out that there were no clear guidelines on how long after making such payments an individual could still be considered "indebted" under this law.