In the case of Ryerson et al., Executors, v. United States in 1940, the Supreme Court ruled on a dispute over estate taxes. The executors of Martin Ryerson's estate had claimed that certain charitable bequests should have been deducted from his gross estate before calculating federal tax liability under the Revenue Act of 1926. However, these bequests were contingent upon surviving relatives not contesting his will - which they did - and thus never took effect. The government argued that since these gifts were not actually made due to conditions within Mr.Ryerson's will being unfulfilled, they could not be subtracted from his taxable estate value. The Supreme Court agreed with this interpretation and held that only actual transfers at death are deductible when determining net taxable estates for federal purposes; potential or conditional ones do not count unless realized. This ruling clarified how to handle such situations in future cases involving similar circumstances.

In the dissenting opinion for Ryerson et al., Executors, v. United States, Justice McReynolds disagreed with the majority's interpretation of Section 302(c) of the Revenue Act of 1926. He argued that this section was intended to prevent tax evasion by transferring property before death and should not apply when a person dies without having had an opportunity to dispose their assets as they wish. According to him, it is unjustifiable and against common sense principles to impose estate taxes on insurance proceeds which were never owned or controlled by decedent during his lifetime but paid directly from insurer to beneficiary after his death. The justice believed that such interpretation would lead towards unnecessary hardship and injustice rather than achieving any substantial public benefit.