In the case of Lederer, Former Collector, v. McGarvey, Executrix (1925), the United States Supreme Court was tasked with determining whether or not a federal estate tax should be applied to property that had been transferred prior to death but after the enactment of a relevant taxing statute. The decedent in question had transferred ownership of certain properties to his wife and children before he died but after Congress passed an act imposing taxes on such transfers if made in contemplation of death. The executors argued that this law could not apply retroactively and thus these transfers were exempt from taxation. The court ruled against them stating that while laws are generally presumed not to have retroactive effect unless explicitly stated otherwise by Congress, this presumption does not apply when interpreting revenue acts like the one at issue here. Therefore, it concluded that any transfer made in contemplation of death after September 8th 1916 (the date when the act became effective) is subject to federal estate tax regardless of whether it occurred before or after passage.

In the dissenting opinion for Lederer, Former Collector, v. McGarvey, Executrix (1925), Justice Stone argued that the majority's decision was inconsistent with previous rulings of the Court and misinterpreted tax law. He contended that a decedent's estate should not be taxed on income earned after death but before distribution to beneficiaries because it is not "income" in any meaningful sense under existing laws or precedents. Instead, he suggested this money represents an increase in corpus of the estate rather than taxable income. Furthermore, he pointed out inconsistencies between this ruling and earlier decisions where similar post-death increases were deemed non-taxable by Supreme Court itself. Thus according to him, such earnings are part of principal amount which should only be subject to taxation once they're distributed among heirs or beneficiaries as their personal incomes.