In the case of Jewett et ux. v. Commissioner of Internal Revenue, 1981, the Supreme Court ruled on a tax dispute involving capital gains from stock dividends. The petitioner, Mrs. Jewett's late husband had received shares as a dividend which were subject to an agreement that they could be sold back to the company at any time for $100 per share - significantly less than their market value - and would automatically be sold back upon his death or if he ceased being a director or officer of the company. The IRS argued that these restrictions meant Mr. Jewett never truly owned the shares in question and therefore owed gift tax when he transferred them to his wife before his death without receiving payment in return. However, Mrs.Jewett contended that her husband did have significant rights over these stocks during his lifetime including voting rights and right to receive dividends; hence it was not taxable under gift taxes but should rather be considered part of her inheritance after Mr.Jewetts' demise. The Supreme Court sided with IRS ruling that because Mr.Jewett didn't possess full ownership due to restrictions placed on those stocks by corporation agreement , transfering them constituted gifts for federal tax purposes.

In the dissenting opinion for Jewett v. Commissioner of Internal Revenue, Justice Harry Blackmun disagreed with the majority's interpretation of Section 2036(a) of the Internal Revenue Code. He argued that this section should not apply to transfers involving reserved life estates because such transactions are fundamentally different from those where a person retains an income interest in transferred property. According to him, when someone reserves a life estate, they retain full possession and enjoyment of their property until death - unlike in cases where only an income interest is retained. Therefore, he believed that these types of transactions should be treated differently under tax law. Furthermore, he criticized the majority for relying on outdated case law and ignoring more recent decisions which support his view.