In the United States v. Mason, Executor case of 1912, the Supreme Court dealt with a dispute over inheritance tax. The decedent had made an inter vivos transfer of property to his children but retained life interest in it and continued to receive income from it until his death. After he died, the federal government sought to include this property in calculating estate taxes owed by his estate. The executor of the estate argued that since legal title was transferred before death, these assets should not be included for taxation purposes upon death. The Supreme Court disagreed with this argument and ruled in favor of the government stating that because decedent retained beneficial interest (income) during his lifetime from those properties even after transferring them legally to others; they were still part of gross estate at time of death for tax calculation purposes under applicable law then (Act June 27th 1902). This decision established precedent on how such transfers are treated for federal inheritance tax calculations.

In the dissenting opinion for United States v. Mason, 1912, Justice Holmes argued that the majority's interpretation of the law was incorrect and overly broad. He contended that Congress did not intend to tax gifts made from one person to another without any consideration or compensation in return. In his view, such transactions were not "income" as defined by law and therefore should not be subject to income tax. Furthermore, he believed that if Congress had intended to include gifts within its definition of taxable income, it would have done so explicitly in its legislation rather than leaving it up to judicial interpretation. Thus, according to Justice Holmes' dissenting opinion, the court overstepped its bounds by interpreting a vague statute in a way that expanded governmental power at the expense of individual rights.