In the 1938 case Davis v. Davis, the United States Supreme Court addressed a dispute over an inheritance tax. The issue at hand was whether or not certain transfers of property were subject to federal estate taxes under the Revenue Act of 1926. The decedent had transferred securities into a trust with income for life to his wife and upon her death, principal to be divided among their children. However, he retained power during his lifetime to change beneficiaries or revoke it entirely without consent from any beneficiary or trustee which made these transfers incomplete gifts until his death when they became irrevocable and thus part of his gross estate for taxation purposes according to IRS regulations. The court ruled in favor of Davis's executors who argued that since no gift was complete until after Mr.Davis’s death (when he could no longer exercise control), there should be no taxable transfer at all prior to that point as per Section 302(c)of the Revenue Act.The decision clarified how trusts are treated in terms of federal estate taxation and set precedent on what constitutes "complete" versus "incomplete" gifts within such arrangements.

In the dissenting opinion for Davis v. Davis, Justice Black disagreed with the majority's decision to dismiss a case involving an interstate commerce dispute on procedural grounds. He argued that the Court should have addressed the substantive issues at hand instead of avoiding them due to technicalities in jurisdiction and procedure. According to him, this was a matter of public importance that warranted immediate attention from the highest court in order to provide clarity and guidance for lower courts dealing with similar cases. Furthermore, he criticized his colleagues' reliance on legal formalism over practical considerations, stating that their approach undermined not only justice but also efficiency in judicial proceedings by prolonging litigation unnecessarily.