In the case of Rasquin, Collector of Internal Revenue v. Humphreys in 1939, the U.S Supreme Court ruled on a dispute involving income tax liability for an individual who had received money from a trust fund. The respondent, Mrs. Humphreys, was given $300 per month by her husband's estate as part of his will and argued that this amount should not be considered taxable income because it was simply fulfilling her right to support from her deceased spouse’s property under New York law. However, the IRS contended that these payments were indeed taxable since they were derived from dividends and interest earned by securities held in trust. The court sided with Mrs. Humphreys stating that she did not have control over or access to any capital gains or other profits generated by the assets within the trust; therefore she could not be taxed on them directly as if they were personal income. Instead, those earnings would only become taxable when distributed out to beneficiaries like herself - at which point they would then constitute "income" subject to taxation under federal law.

In the dissenting opinion for Rasquin v. Humphreys, Justice McReynolds argued that the majority's decision to uphold a tax on gifts made by a U.S. citizen residing abroad was inconsistent with previous court rulings and principles of international law. He contended that under these principles, an individual living in another country is subject to its laws and taxes, not those of their home nation unless explicitly stated otherwise by treaty or statute. The justice also pointed out that there were no provisions within the Revenue Act of 1924 (under which this case was prosecuted) specifically stating it applied to citizens living abroad. Therefore, he believed it should not be interpreted as such without clear legislative intent from Congress - something he felt was lacking here.