In the case of Letulle v. Scofield, Collector of Internal Revenue in 1939, the Supreme Court ruled on a dispute regarding estate taxes. The petitioner was an executor to an estate that included shares in a corporation which had been transferred by the deceased within two years prior to his death without adequate consideration. The Commissioner of Internal Revenue included these shares' value in calculating gross estate for tax purposes under Section 302(c) and (d) of the Revenue Act 1926. This inclusion was contested by Mr. Letulle who argued that this transfer did not fall under those sections as it wasn't intended or made "in contemplation of death". However, after reviewing evidence including letters written by deceased indicating he knew about his deteriorating health at time of transfers, court concluded otherwise and upheld lower courts’ decisions favoring IRS's interpretation - thus ruling against Mr.Letulle’s claim.

In the dissenting opinion for Letulle v. Scofield, Justice Black argued that the majority's decision was inconsistent with previous rulings of the Court and violated principles of equity. He contended that by allowing a tax deduction for interest paid on an indebtedness incurred to purchase stock in a corporation which later became worthless, the court essentially permitted taxpayers to deduct losses from their income twice: once when they deducted interest payments made on loans used to buy now-worthless stocks, and again when they claimed deductions for those same worthless securities. This double deduction, he believed, contradicted both statutory law and prior decisions of this Court which had consistently held that only actual out-of-pocket losses could be deducted from gross income under federal tax laws. Furthermore, Justice Black expressed concern about potential abuses if such double deductions were allowed since it would open up opportunities for wealthy individuals or corporations to manipulate their taxable incomes through strategic borrowing and investment practices.