In the 1935 case of Helvering v. McIlvaine, the U.S Supreme Court addressed a dispute regarding estate tax law. The Commissioner of Internal Revenue argued that certain transfers made by a decedent prior to his death should be included in his gross estate for federal taxation purposes under Section 302(c) and (d) of the Revenue Act of 1926. These sections stipulate that any transfer intended to take effect at or after death is subject to inclusion in an individual's gross estate for tax calculations. The trustees countered this argument, asserting these transfers were not meant to take effect post-death but rather during life and thus should not be taxed as part of the decedent’s gross estate. The court ruled in favor of Helvering, concluding that despite being transferred before death, those assets were indeed intended to come into possession or enjoyment at or after death based on their nature and circumstances surrounding them; hence they are taxable under Section 302(c). This decision clarified how "transfers" are defined within context of federal taxation laws.

In the dissenting opinion for Helvering v. McIlvaine, Justice Stone argued that the majority's interpretation of Section 302(c) of the Revenue Act was incorrect. He contended that this section should not be read as a limitation on what constitutes "income," but rather as an explanation of how to calculate it in certain situations involving trusts and estates. According to him, the law does not exclude from gross income any amount which is distributed out of corpus or principal; instead, it merely provides a method for determining its value when such distribution occurs. Therefore, he believed that even if part or all of a trust distribution comes from capital gains realized by selling assets within the trust (as opposed to dividends or interest), it still counts as taxable income under federal law.