In the United States v. Merriam case of 1923, the Supreme Court ruled on a tax dispute involving an estate's income from timber sales. The executors of the estate argued that they should be allowed to deduct depreciation for standing timber sold during the year in question under Section 214(a)(10) of the Revenue Act of 1918. However, this was contested by government officials who claimed that such deductions were not applicable as per their interpretation of tax laws at that time. The court sided with government officials and held that no deduction could be made for depletion or depreciation in respect to standing timber sold during any given year because it did not fall within "property used in trade or business," which is what Section 214(a)(10) pertained to according to its language and legislative history. This decision clarified how certain provisions related to property depreciation would apply under U.S federal income tax law.

In the dissenting opinion for United States v. Merriam, Justice Oliver Wendell Holmes Jr. disagreed with the majority's interpretation of tax law in relation to estate taxes and life estates. He argued that a life tenant should not be taxed on the full value of property if they do not have complete control over it or cannot dispose of it as they wish during their lifetime. According to him, taxing based on potential future benefits was speculative and unfair because those benefits might never materialize due to death or other circumstances beyond the taxpayer's control. He also pointed out inconsistencies in how different types of property were treated under tax law, which he believed violated principles of equal protection under law.