The Edwards v. Slocum case in 1923 revolved around the issue of taxation on a trust fund established by a deceased individual, Mr. Charles F. Hoffman Jr., for his wife and children's benefit. The former Collector of Internal Revenue for the Second District of New York, Edwards, argued that this trust fund should be subject to federal estate tax as per the Revenue Act of 1916 because it was transferred at death without full consideration in money or money’s worth under Section 202(b). However, Mrs. Slocum (Hoffman's daughter) and other respondents contended that no such transfer occurred at death but rather during Mr.Hoffman's lifetime when he set up an irrevocable trust deed with himself as trustee - thus not taxable upon his demise. The Supreme Court ruled in favor of Mrs.Slocum and others stating that there was no transfer "in contemplation" or "intended to take effect" at or after death since Mr.Hoffman had divested himself completely from control over property before his passing away; hence it did not fall within purview of Section 202(b) making it non-taxable.

In the dissenting opinion for Edwards v. Slocum, Justice McReynolds disagreed with the majority's decision to allow a trustee in bankruptcy to recover taxes paid by the bankrupt estate under protest. He argued that allowing such recovery would undermine tax collection and potentially disrupt public services funded by those taxes. Furthermore, he contended that there was no legal basis for treating a trustee in bankruptcy differently from any other taxpayer who pays their taxes under protest but is not allowed to recover them later on. According to him, this ruling could open up floodgates of litigation as it sets a precedent where taxpayers can challenge their tax obligations after they have already been settled.