In Lyeth v. Hoey, 305 U.S. 188 (1938), the Supreme Court held that, for income tax purposes, property received by an heir under an agreement compromising and settling claims contesting the decedent's will was acquired by inheritance. Id. at 194-96. The Court noted that in many jurisdictions "the amount received by an heir under an agreement compromising a contest of his ancestor's will is considered to be received by virtue of his heirship and is subject to an inheritance tax unless the statute exempts him." Id. at 192. The Court reasoned that "the distinction sought to be made between acquisition through . . . a judgment after a trial and acquisition by a compromise agreement in lieu of such a judgment is too formal to be sound . . . ." Id. at 196. The Court concluded that, for purposes of federal income taxation, the proceeds of a settlement of a will contest are to be treated in the same manner as if they had been distributed in accordance with the terms of the will.