In the United States v. Pyne et al., Executor, 1940 case, the Supreme Court ruled on a dispute involving estate taxes. The decedent had transferred property to his wife during their marriage without any consideration or compensation in return from her. After his death, the Commissioner of Internal Revenue included this property's value in calculating the gross estate for tax purposes under Section 302(c) of the Revenue Act of 1926 and assessed additional taxes accordingly. The executors contested this decision arguing that these transfers were not made "in contemplation of death" as defined by law but rather out of love and affection between spouses which should be exempt from taxation. The lower courts sided with executors stating that such transfers are not taxable unless there is clear evidence showing they were made "in contemplation of death". However, upon appeal to Supreme Court, it reversed these decisions holding that marital gifts can indeed be taxed if they fall within three years prior to donor’s death irrespective whether they were given “in contemplation” or not according to Section 811(c) (1)(B). Thus ruling favored IRS concluding that such inter-spousal transactions do come under purview for federal estate tax calculations.

The dissenting opinion in the United States v. Pyne et al., Executor case argued that the majority's decision was inconsistent with previous rulings and interpretations of tax law. The dissent emphasized that a life estate, which is not subject to disposition by will, should not be included in gross estate for taxation purposes upon death. It pointed out that this interpretation had been consistently upheld in prior cases where it was ruled that only property passing from decedent at his death could be taxed under federal law. Therefore, according to the dissenters, including Mrs. Pyne’s life interest as part of her husband’s taxable estate contradicted established precedent and misinterpreted relevant statutes.