In the case of Ithaca Trust Company v. United States in 1928, the Supreme Court ruled on a dispute over estate taxes. The decedent had left his wife a life interest in his property and directed that upon her death, the remainder should go to charity. However, he also gave her power to appoint by will any part or all of this remainder for non-charitable purposes. After she died without exercising this power, the executor claimed an estate tax deduction for charitable contributions based on the full value of what went to charity after both deaths. The government argued that at least some portion was not deductible because it could have been diverted from charity if she exercised her power. The Supreme Court sided with the executor and allowed full deduction as charitable contribution under Revenue Act 1918's Section 403(a)(3). They reasoned that since no part was appointed away from charity by widow’s will (which was known when filing estate tax return), there is certainty about its destination being only towards charities; thus making it eligible for deductions.

In the dissenting opinion for Ithaca Trust Company v. United States, Justice Stone argued that the majority's decision to value a life estate at the time of death rather than when it was created contradicted established legal principles and previous court decisions. He contended that this approach would lead to arbitrary results because it relied on unpredictable factors such as changes in interest rates or life expectancy after death. Furthermore, he believed that this method could unfairly burden estates with additional taxes if values increased between creation and death. Instead, Justice Stone advocated for valuing life estates based on their worth at inception since this provided a more accurate reflection of what was transferred and received by beneficiaries.