The U.S. Supreme Court case Coolidge et al., Trustees, v. Long, Commissioner of Corporations and Taxation of Massachusetts in 1930 revolved around the taxation of a trust fund established by a resident (now deceased) of Massachusetts for his children who were also residents there. The trustees argued that the state had no right to tax income from securities held outside its jurisdiction as part of this trust fund. However, the court ruled against them stating that since both beneficiaries and settlor were residents at the time when trust was created, it was within state's power to impose taxes on such funds regardless where they are located or how they are managed.

In the dissenting opinion for Coolidge et al., Trustees, v. Long, Commissioner of Corporations and Taxation of Massachusetts (1930), Justice Holmes argued that the state's power to tax should not be limited by a trust's decision to distribute its income outside of the state. He believed that if a trust was managed and controlled within a particular state, then it made sense for that state to have taxing authority over it. Furthermore, he contended that limiting this power could lead to trusts avoiding taxation altogether by distributing their income across multiple states or even countries. In his view, such an outcome would undermine both fairness and fiscal stability.