In the case of Fidelity-Philadelphia Trust Co. et al., Executors, v. Smith, Collector of Internal Revenue (1957), the U.S Supreme Court was asked to determine whether a trust's income could be taxed if it had been used for charitable purposes during that year but not distributed until after the end of the tax year. The court ruled in favor of Fidelity-Philadelphia Trust Co., stating that as long as funds are set aside for charity within a given tax year, they can be deducted from taxable income even if they aren't actually paid out until later years. This decision clarified an important aspect regarding taxation and trusts: when determining deductibility based on charitable contributions made by trusts, what matters is not when those funds are disbursed to charities but rather when they're earmarked or designated for such use.

In the dissenting opinion for Fidelity-Philadelphia Trust Co. et al., Executors, v. Smith, Collector of Internal Revenue, Justice Frankfurter disagreed with the majority's interpretation of Section 811(c) of the Internal Revenue Code and its application to this case. He argued that Congress intended for property transferred by a decedent during his lifetime to be included in his gross estate if he retained an interest or control over it at death; however, he did not believe that Mrs. Sternbergh’s transfer met these criteria as she had relinquished all rights and control over her assets when she created irrevocable trusts more than three years before her death. Therefore, according to him those assets should not have been included in her taxable estate upon her passing away.