In the case of Davis, Agent v. Kennedy, Administratrix of Kennedy, Decease (1924), the U.S Supreme Court was tasked with determining whether a federal estate tax could be levied on an insurance policy held by a deceased individual. The decedent had taken out two life insurance policies and named his wife as beneficiary; however, he retained control over these policies during his lifetime. After his death, the Commissioner of Internal Revenue included these policies in calculating the gross value of his estate for taxation purposes under Section 402(g) of the Revenue Act 1918. The administratrix argued that this inclusion was unlawful because she believed that such proceeds were not part of her husband's gross estate. The court ruled in favor of Davis (the agent representing IRS). It determined that since Mr. Kennedy had maintained incidents-of-ownership over those life insurance contracts at time-of-death - including power to change beneficiaries or surrender/cancel them - their proceeds indeed constituted part 'property' within meaning given by Congress when defining "gross estate" for federal taxation purposes under aforementioned act section.

The dissenting opinion in the case of Davis, Agent v. Kennedy, Administratrix of Kennedy, Decease argued that the majority's decision was not grounded in established legal principles and failed to consider important aspects of the case. The dissenting justices believed that there were significant questions regarding whether or not a contract existed between Mr. Davis and Mr. Kennedy before his death, which should have been addressed by a jury rather than decided upon by judges alone. They also disagreed with the majority's interpretation of certain facts related to this alleged contract and felt that these interpretations unfairly favored one party over another without sufficient evidence or reasoning.