In the case of Walsh, Collector of Internal Revenue v. Brewster (1920), the United States Supreme Court was tasked with determining whether a tax assessment on an estate could be made after the statutory period for such assessments had expired. The decedent's executors had filed their return and paid taxes due within three years from when they were appointed, but additional property was discovered later which increased the value of the estate significantly. The IRS sought to collect additional taxes based on this newly discovered property even though it was outside of their normal three-year window for doing so. The court ruled in favor of Brewster, stating that while there is a general rule allowing extensions for fraud or undervaluation cases, no such exception existed in this situation where new assets were simply discovered late. Therefore, according to law at that time (Revenue Act 1916), any attempt by IRS to assess more tax beyond its standard limitation period would not be valid unless one can prove fraudulent intent or gross understatement by taxpayer initially.

In the dissenting opinion for Walsh v. Brewster, Justice Holmes disagreed with the majority's interpretation of tax law and its application to this case. He argued that a deceased person's estate should not be taxed on income earned after death but before distribution to heirs or beneficiaries because it is not "income" in the traditional sense as defined by tax laws. Instead, he viewed it as part of the corpus or principal amount of an estate which should only be subject to inheritance taxes rather than income taxes. Furthermore, he contended that taxing such amounts would result in double taxation - once when initially included in gross estate value and again when considered as post-death earnings - which was against principles of fairness and equity inherent in taxation policies.