In the case of Helvering v. Bliss, 1934, the United States Supreme Court ruled that gifts given by a donor who died within two years of giving were subject to federal estate tax. The court held that such transfers fell under Section 302(c) of the Revenue Act of 1926 which imposed an estate tax on any transfer made in contemplation of death. This was regardless if it was intended to take effect at or after his death. In this specific case, Mr. Bliss had transferred securities and bonds as gifts less than two years before his death but did not retain any interest or power over them post-transfer. Despite arguments from Mr.Bliss's executors stating these should be exempt from taxation because they were completed inter vivos (between living persons) gifts without any strings attached, Justice Cardozo writing for majority disagreed and upheld their inclusion in gross estate for taxation purposes.

In the dissenting opinion for Helvering v. Bliss, Justice Stone argued that the majority's interpretation of the Revenue Act was incorrect and inconsistent with its legislative history. He contended that Congress intended to tax gifts only when they were complete and irrevocable, not when they were contingent or revocable as in this case. According to him, a gift is not "complete" until it has left the donor's control completely; if there are conditions attached which allow for potential reversion back to the donor, then it cannot be considered a taxable event under existing law. Therefore, he disagreed with taxing Mr. Bliss on his transfer of assets into trust where he retained an interest because such transfers should not be treated as completed gifts subject to taxation.