The U.S. Supreme Court case Commissioner of Internal Revenue v. Estate of Bedford et al., 1944, revolved around the issue of estate tax valuation and whether or not a discount should be applied to reflect potential capital gains taxes on an asset within the estate. The decedent owned shares in a family corporation that held significant real estate assets which had appreciated greatly over time. Upon his death, these shares were included in his gross estate at their fair market value without any reduction for potential capital gains tax liability if those properties were sold by the company after his death. The executor argued that such a discount was appropriate as it would affect what a willing buyer might pay for those shares knowing they carried this latent tax liability. However, the court ruled against this argument stating that no deduction could be made from the value of gross estates for unrealized capital gains taxes on property included therein because there is no certainty about when or even if these properties will ever be sold triggering such liabilities.

In the dissenting opinion for Commissioner of Internal Revenue v. Estate of Bedford et al., Justice Jackson argued that the majority's decision was a departure from established principles regarding tax law and estate valuation. He contended that the court had failed to consider relevant factors in determining whether or not certain assets should be included in an estate, such as their potential future value or income-producing capacity. Furthermore, he disagreed with the majority's interpretation of "fair market value," arguing that it should reflect what a willing buyer would pay rather than simply being based on past sales prices. Finally, he expressed concern about potential negative implications for tax administration and revenue collection resulting from this ruling.