In the 1919 case of Henry, Executor of Hendricks v. United States, the Supreme Court dealt with a dispute over inheritance tax. The decedent had transferred property to his children before his death but retained life interest in it and continued to receive income from it until he died. After his death, the federal government assessed an inheritance tax on this property as part of the gross estate under Section 202(b) of Revenue Act (1918). The executor contested this assessment arguing that since legal title was transferred prior to death, such properties should not be included in gross estate for taxation purposes. The Supreme Court ruled against Henry's argument stating that despite transferring legal title during lifetime, if a person retains possession or enjoyment of those assets till their demise then such transfers are deemed incomplete for taxation purposes and hence can be taxed as part of their estate after they die. This decision established important precedent regarding how "retained life interests" are treated under U.S. federal law for inheritance tax calculations.

In the dissenting opinion for Henry, Executor of Hendricks v. United States (1919), Justice Oliver Wendell Holmes Jr., joined by Justice Louis Brandeis, argued that the majority's decision to uphold a tax on an estate based on its value at death rather than its value when it was originally acquired violated the constitutional prohibition against direct taxes without apportionment among states according to population. He contended that this interpretation expanded Congress' power beyond what was intended by the Constitution and could potentially lead to unfair taxation practices in future cases. Furthermore, he disagreed with the majority's view that inheritance is a privilege granted by society and therefore subject to taxation; instead, he believed property rights are inherent and should not be unduly burdened by such taxes.