In the United States v. Jacobs, Executrix case of 1938, the Supreme Court ruled on a matter concerning estate taxes. The issue at hand was whether or not certain property transferred by the decedent before his death should be included in his gross estate for federal tax purposes. The decedent had made an agreement with his wife to divide their property equally and transfer it to a trust fund for their children while retaining life estates in half of the properties each. After this arrangement, he died first and left behind considerable assets that were taxed heavily under federal law as part of his gross estate. His executrix contested this taxation arguing that since they had already agreed upon dividing their properties into trusts prior to his death, these assets shouldn't be considered part of her husband's taxable estate. The Supreme Court disagreed with her argument stating that even though there was an agreement between them regarding division and transferal of property into trusts, until actual transfers took place those properties remained within control of both parties during lifetime which means they are still subject to inclusion in either party’s gross estate upon death.

In the dissenting opinion for United States v. Jacobs, it was argued that the majority's interpretation of Section 302(g) of the Revenue Act of 1926 was incorrect. The dissenting justices believed that this section should not be interpreted to mean that property transferred by a decedent before death, but over which they retained some control or benefit until their passing, is subject to estate tax. They contended that such an interpretation would lead to double taxation and go against Congress' intent when drafting the law. Instead, they suggested interpreting Section 302(g) as only applying in cases where there is no bona fide sale or transfer for adequate consideration made prior to death - something which did not apply in this case according to them.