In the 1931 case of Phillips, Collector of Internal Revenue v. Dime Trust & Safe Deposit Co., Executor, the United States Supreme Court ruled on a matter concerning federal estate tax law. The issue at hand was whether or not certain property transferred by a decedent before death should be included in his gross estate for purposes of calculating federal estate taxes. The decedent had made inter vivos transfers (transfers during life) to his children without retaining any interest or power over those assets. However, he did retain income from these properties until his death and also retained control over who would receive them after him through revocable trusts. The Supreme Court held that such property could indeed be included in the gross estate for tax purposes under Section 302(d) and (e) of the Revenue Act of 1926 because it fell within its definition as "property passing under general power". This decision clarified that even if an individual does not have direct ownership or control over an asset at their time of death but has significant influence on how it will pass onto others post-death, this can still constitute partaking in one's 'gross estate' subject to taxation.

In the dissenting opinion for Phillips v. Dime Trust & Safe Deposit Co., Justice Stone argued that the majority's interpretation of Section 302(c) of the Revenue Act was incorrect. He believed that Congress intended to tax all transfers made in contemplation of death, not just those motivated by a desire to avoid estate taxes. According to him, this broader interpretation would be more consistent with the overall purpose and structure of the Act. Furthermore, he disagreed with how much weight was given to evidence from state courts about whether or not certain transfers were made in contemplation of death; instead, he thought federal law should have been used as a guide. Finally, Justice Stone felt it was inappropriate for lower courts' findings on matters like these to be considered final when they are so closely tied up with legal interpretations.