In the case of Reinecke v. Northern Trust Company (1928), the U.S. Supreme Court ruled on a matter regarding federal estate tax law and its application to life insurance policies. The Northern Trust Company, as executor of an estate, had paid out two life insurance policies that were taken out by the deceased on his own life but payable to his wife upon death. The Collector of Internal Revenue argued these payouts should be included in the gross estate for taxation purposes under section 302(g) of the Revenue Act of 1926 because they were transfers intended to take effect at or after death. The court disagreed with this interpretation, ruling instead that such payments from insurance policies did not fall within this category since they became payable immediately upon death rather than being transferred through a will or other testamentary instrument taking effect after death. Therefore, these amounts could not be taxed as part of the gross estate under section 302(g). This decision clarified how certain types of life insurance policy payouts would be treated for federal tax purposes.

In the dissenting opinion for Reinecke v. Northern Trust Company, Justice Stone argued that the majority's interpretation of tax law was incorrect and overly narrow. He believed that Congress intended to impose a transfer tax on all transfers of property made in contemplation of death, regardless if they were revocable or irrevocable trusts. In his view, the majority failed to consider this broader legislative intent when interpreting specific statutory language about "transfers". Furthermore, he disagreed with their conclusion that only transfers where possession or enjoyment could be obtained only by surviving the decedent should be taxed; instead arguing any transfer made in anticipation of death should fall under this category. This would include cases like this one where an individual transferred assets into a trust but retained income rights during their lifetime - effectively still controlling those assets until death even though legal title had been transferred earlier.