The U.S. Supreme Court case Commissioner of Internal Revenue v. Estate of Bosch in 1966 addressed the issue of whether federal courts, including tax courts, must follow state trial court decisions on matters related to state law when determining federal estate tax liability. The case arose after a New York Surrogate's Court ruled that certain property transfers made by Carl Bosch before his death were not intended as gifts and thus should be included in his gross estate for federal estate tax purposes. The IRS disagreed with this ruling and assessed additional taxes against Bosch's estate based on its belief that the transfers were indeed taxable gifts. In a decision written by Justice Byron White, the Supreme Court held that while lower-level state court rulings do not bind federal courts on issues of state law, they should nonetheless give "proper regard" to such decisions unless it is convinced by other persuasive data that the highest court of the State would decide otherwise. This principle has since been referred to as "Bosch rule," which continues to guide how federal courts treat lower-level state court rulings today.

In the dissenting opinion for Commissioner of Internal Revenue v. Estate of Bosch, Justice Black argued that state court decisions should be binding on federal courts in matters involving state law, even if those decisions are not from the highest court in the state. He believed this was necessary to maintain a balance between federal and state power as well as to respect principles of federalism. Furthermore, he contended that it is unfair and confusing for taxpayers if their tax liability can change based on whether a case is heard by a federal or state court. In his view, allowing lower-level state courts' rulings to have final say would provide more certainty and stability for citizens navigating complex legal issues related to taxation.