In McCandless et al. v. United States (1935), the Supreme Court ruled on a case involving the interpretation of inheritance tax laws, specifically those related to property located outside of U.S. jurisdiction but owned by American citizens at their time of death. The plaintiffs were executors for an estate that included land in Hawaii, which was not yet a state but rather a territory during this period. They argued that federal law did not allow for taxation on such properties and appealed against paying taxes levied by the Bureau of Internal Revenue (now IRS). However, the court held that territorial lands are within U.S jurisdiction for purposes of federal estate tax and therefore subject to it under existing legislation - even though they may be exempt from certain other forms domestic legislation due to their status as territories rather than states.

In the dissenting opinion for McCandless et al. v. United States, Justice Stone argued that the majority's decision to uphold a tax on gifts made by non-resident aliens was inconsistent with previous court rulings and principles of international law. He contended that such taxes should only apply when there is a substantial connection between the taxpayer and the taxing jurisdiction, which he did not believe existed in this case as the property transferred was located outside of U.S territory. Furthermore, he expressed concern about potential double taxation issues if other countries were to adopt similar policies towards American citizens living abroad. Ultimately, Justice Stone believed that Congress had overstepped its bounds by imposing this tax and urged his colleagues to reconsider their position.