In the case of United States v. Estate of Grace et al., 1968, the Supreme Court was tasked with determining whether a federal estate tax could be levied on property that had been transferred by a decedent prior to death but retained life interest in. The decedent, Mrs. Grace, had created two trusts for her children and reserved income from these trusts for herself during her lifetime. Upon her death, the Commissioner of Internal Revenue included these trust assets in Mrs. Grace's gross estate under Section 2036(a) of the Internal Revenue Code which states that if one transfers property but retains an income or enjoyment from it until their death then it is part of their taxable estate. The executors contested this inclusion arguing that since she did not retain any control over how trust principal would be managed or disposed off after her death (no power to alter/amend/revoke), they should not be considered as part of gross estate. However, the Supreme Court upheld lower court rulings stating that even though she didn't have control over disposition post-death, retaining right to enjoy/use them till end made them liable for taxation upon her demise.

In the dissenting opinion for United States v. Estate of Grace et al., the justice argued that the majority's interpretation of Section 811(c) was incorrect and overly broad, leading to an unfair result. The justice believed that this section should not apply to property transferred before death but only after death as part of a decedent's gross estate. They also disagreed with the majority’s view on how state law impacts federal tax law, arguing instead that federal tax law is supreme and cannot be altered by state laws or regulations. Furthermore, they contended that applying Section 811(c) in such a way could lead to double taxation which would violate principles of fairness and equity in taxation policy. Therefore, they concluded that Congress did not intend for Section 811(c) to apply under these circumstances.