Amicus Curiae Brief — Charles G. Moore, et ux., Petitioners v. United States
Supreme Court briefSep 6, 2023
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No. 22-800
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In The
Supreme Court of the United States
---------------------------------♦--------------------------------CHARLES G. MOORE and KATHLEEN F. MOORE,
Petitioners,
v.
UNITED STATES OF AMERICA,
Respondent.
---------------------------------♦--------------------------------On Writ Of Certiorari To The
United States Court Of Appeals
For The Ninth Circuit
---------------------------------♦--------------------------------BRIEF FOR MARK E. BERG
AS AMICUS CURIAE
IN SUPPORT OF PETITIONERS
---------------------------------♦--------------------------------WILLIAM A. HARVEY
Counsel of Record
KLEHR HARRISON HARVEY
BRANZBURG LLP
1835 Market Street
Suite 1400
Philadelphia, PA 19103
(215) 569-3003
wharvey@klehr.com
Counsel for the Amicus Curiae
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COCKLE LEGAL BRIEFS (800) 225-6964
WWW.COCKLELEGALBRIEFS.COM
i
QUESTION PRESENTED
Whether the Sixteenth Amendment authorizes
Congress to tax unrealized sums without apportionment among the states.
ii
TABLE OF CONTENTS
Page
QUESTION PRESENTED...................................
i
INTEREST OF THE AMICUS CURIAE .............
1
INTRODUCTION AND SUMMARY OF ARGUMENT ...............................................................
2
ARGUMENT ........................................................
6
I.
II.
The Section 965 Tax is Constitutionally
Infirm Because it is an Unapportioned
Direct Tax that is Not Imposed on Sixteenth Amendment “Incomes . . . Derived,”
With No Basis for Deeming a Dividend of
the Corporation’s Accumulated Earnings
to its Shareholders ....................................
6
The Other Tax Provisions Cited in this
Regard Do Not Suffer from the Same
Constitutional Infirmity as the Section
965 Tax....................................................... 11
A. The Attribution of Certain Non-U.S.
Corporations’ Current Realized Income
to its U.S. Shareholders, Held Constitutional by Lower Courts, is Fundamentally Different from the Section
965 Tax on Deemed Distributions ....... 11
B. Even More Fundamentally Different
from the Section 965 Tax on Deemed
Distributions is the Attribution of the
Current Realized Income of a Partnership to its Partners .............................. 17
iii
TABLE OF CONTENTS – Continued
Page
C. Tax Provisions that Apply at the
Election of the Taxpayer, Such as the
Attribution of S Corporations’ Current
Realized Income to Their Shareholders,
are Not Implicated by the Court’s Ruling in This Case ................................... 21
D. The Tax Treatment of Regulated Futures Contracts is Not Implicated by
the Court’s Ruling in This Case .......... 22
E. Methods of Tax Accounting are Also
Not Implicated by the Court’s Ruling
in This Case ......................................... 24
CONCLUSION..................................................... 27
iv
TABLE OF AUTHORITIES
Page
CASES
Bromley v. McCaughn, 280 U.S. 124 (1929) .................6
Burnet v. Wells, 289 U.S. 670 (1933) .............................8
Corliss v. Bowers, 281 U.S. 376 (1930) .........................8
Dougherty v. Commissioner, 60 T.C. 917 (1973) .... 16, 17
Eder v. Commissioner, 138 F.2d 27 (2d Cir.
1943) ............................................................ 12, 16, 25
Eisner v. Macomber, 252 U.S. 189 (1920)......... 4, 6-9, 14-16,
....................................................................... 20, 23, 24, 27
Estate of Whitlock v. Commissioner, 494 F.2d
1297 (10th Cir. 1974) .............................. 12, 14-16, 18
Estate of Whitlock v. Commissioner, 59 T.C. 490
(1972) ................................................................. 14-16
Fernandez v. Wiener, 326 U.S. 340 (1945) ....................6
Garlock v. Commissioner, 489 F.2d 197 (2d Cir.
1973) ....................................................... 12, 14-16, 18
Garlock v. Commissioner, 58 T.C. 423 (1972) ....... 14, 16
Heiner v. Mellon, 304 U.S. 271 (1938) ............ 18, 20, 25
Helvering v. Horst, 311 U.S. 112 (1940)........................8
Helvering v. Independent Life Insurance Co., 292
U.S. 371 (1934) .............................................................. 7
Helvering v. Northwest Steel Rolling Mills Inc.,
311 U.S. 46 (1940) ................................................. 7, 8
Hoeper v. Tax Commission of Wisconsin, 284 U.S.
206 (1931) ................................................................10
v
TABLE OF AUTHORITIES – Continued
Page
Knowlton v. Moore, 178 U.S. 41 (1900) .........................6
Moore v. United States, 36 F.4th 930 (9th Cir.),
rehearing denied, 53 F.4th 507 (9th Cir.
2022) .............................................. 4, 5, 11, 18, 26, 27
Murphy v. United States, 992 F.2d 929 (9th Cir.
1993) .................................................................. 23, 24
National Federation of Independent Business v.
Sebelius, 567 U.S. 519 (2012) ............................ 4, 6, 7
CONSTITUTIONAL PROVISIONS
U.S. Const. amend. XIV ..............................................10
U.S. Const. amend. XVI ....1-9, 11, 14, 17, 18, 20, 21, 27
U.S. Const. art. I, §2, cl. 3...................................... 2, 3, 9
U.S. Const. art. I, §9, cl. 4...................................... 2, 3, 9
STATUTES
26 U.S.C. §1 ................................................................. 9, 19
26 U.S.C. §11 ............................................................... 9, 19
26 U.S.C. §61(a)(7) ...................................................... 9, 19
26 U.S.C. §301(c) ................................................... 9, 13, 19
26 U.S.C. §311(b)......................................................... 9, 19
26 U.S.C. §312 ................................................................. 13
26 U.S.C. §312(n) ............................................................ 13
26 U.S.C. §316 ................................................................. 13
26 U.S.C. §316(a)(1) ........................................................ 13
vi
TABLE OF AUTHORITIES – Continued
Page
26 U.S.C. §316(a)(2) ........................................................ 13
26 U.S.C. §336(a)......................................................... 9, 19
26 U.S.C. §451(a) .........................................................25
26 U.S.C. §483 .............................................................25
26 U.S.C. §701 ....................................................9, 18-20
26 U.S.C. §§701-761 ................................................ 9, 19
26 U.S.C. §702 ....................................................... 18-20
26 U.S.C. §704 .............................................................20
26 U.S.C. §706(a) ................................................... 18, 20
26 U.S.C. §§721-723 ....................................................19
26 U.S.C. §§731-735 ....................................................19
26 U.S.C. §741 .............................................................19
26 U.S.C. §743 .............................................................19
26 U.S.C. §751 .............................................................19
26 U.S.C. §751(a) .........................................................20
26 U.S.C. §752 .............................................................19
26 U.S.C. §754 .............................................................19
26 U.S.C. §§851-855 ................................................ 9, 19
26 U.S.C. §§856-859 ................................................ 9, 19
26 U.S.C. §951 ..................................................12-14, 17
26 U.S.C. §951(a) .........................................................12
26 U.S.C. §951(a)(1) ......................................................3
26 U.S.C. §951(a)(1)(A) ......................................... 12, 15
vii
TABLE OF AUTHORITIES – Continued
Page
26 U.S.C. §951(a)(1)(B) ................................... 12, 14, 16
26 U.S.C. §951(a)(2) ......................................................3
26 U.S.C. §951(b) .........................................................12
26 U.S.C. §951A...........................................................13
26 U.S.C. §951A(c)(2)(A) .............................................13
26 U.S.C. §952 .............................................................12
26 U.S.C. §952(c)(1)(A) ................................................13
26 U.S.C. §956(a) .........................................................14
26 U.S.C. §957(a) .........................................................12
26 U.S.C. §957(c) .........................................................12
26 U.S.C. §958 .............................................................12
26 U.S.C. §965 .....................2-8, 10-12, 16-18, 20-25, 27
26 U.S.C. §965(a) ...........................................................3
26 U.S.C. §965(c) ...........................................................3
26 U.S.C. §965(h)...........................................................3
26 U.S.C. §1256 ..................................................... 23, 24
26 U.S.C. §1256(a) .......................................................23
26 U.S.C. §§1271-1275 ................................................25
26 U.S.C. §1272 ...........................................................26
26 U.S.C. §1274 ...........................................................26
26 U.S.C. §1293 ...........................................................22
26 U.S.C. §1295(b) .......................................................22
26 U.S.C. §1297(a) .......................................................22
viii
TABLE OF AUTHORITIES – Continued
Page
26 U.S.C. §§1361-1379 ...................................... 9, 19, 21
26 U.S.C. §1361(a)(1) ..................................................22
26 U.S.C. §1362(a)(1) ..................................................22
26 U.S.C. §1362(a)(2) ..................................................22
26 U.S.C. §1366(a) .......................................................21
26 U.S.C. §§1381-1388 ............................................ 9, 19
26 U.S.C. §7872 ...........................................................25
Del. Code Ann. tit. 6, §15-301(1).................................19
Del. Code Ann. tit. 6, §15-306(a).................................19
Del. Code Ann. tit. 8, §102(b)(6) .................................19
Del. Code Ann. tit. 8, §122 ..........................................19
Del. Code Ann. tit. 8, §141(a) ......................................19
Treas. Reg. §1.451-1(a) ......................................... 25, 26
OTHER AUTHORITIES
Bruce Ackerman, Taxation and the Constitution,
99 Colum. L. Rev. 1 (1999) ........................................5
Edward T. Roehner & Sheila M. Roehner, Realization: Administrative Convenience or Constitutional Requirement?, 8 Tax L. Rev. 173
(1953) .........................................................................4
Elliott Manning, Partnerships – Conceptual Overview, 710-3d Tax Mgmt. Port. (BNA) §I ..................19
H.R. Rep. No. 83-2543 (1954) (Conf. Rep.) .................20
ix
TABLE OF AUTHORITIES – Continued
Page
Henry Ordower, Revisiting Realization: Accretion Taxation, the Constitution, Macomber,
and Mark to Market, 13 Va. Tax Rev. 1 (1993) .........4
Mark E. Berg and Fred Feingold, The Deemed
Repatriation Tax – A Bridge Too Far?, 158 Tax
Notes 1345 (Mar. 5, 2018) ......................... 1, 8, 10, 16
Mark E. Berg, Determining Which Taxes are
Prohibited Direct Taxes After NFIB, 138 Tax
Notes 205 (Jan. 14, 2013) ..........................................1
Mark E. Berg, Bar the Exit (Tax)!: Section
877A, the Constitutional Prohibition Against
Unapportioned Direct Taxes and the Realization Requirement, 65 Tax Lawyer 181
(2012) ................................................. 1, 4, 6, 8, 20, 26
Mark E. Berg, Insight: The Proposed Wealth Tax
Would be Unconstitutional, Bloomberg BNA
Daily Tax Report (Feb. 15, 2019) ..............................1
Monte A. Jackel, Potential Implications of Supreme
Court Review in Moore Case (Jul. 11, 2023),
available at https://medium.com/jackeltaxlaw/
potential-implications-of-supreme-court-reviewin-moore-case-ba4d64f3c4f7 .............................. 24, 25
S. Rep. No. 87-1881 (1962) ..........................................15
1
INTEREST OF THE AMICUS CURIAE1
Mark E. Berg, a tax attorney who has been in private practice for 38 years, is a New York City-based
partner in, and Chair of the Tax Practice Group of, the
law firm of Klehr Harrison Harvey Branzburg LLP.
Throughout his professional career, amicus has written extensively on various tax-related topics. Among
his publications are several articles2 questioning
whether certain enacted and proposed federal taxes
that do or would tax amounts that have yet to be realized by the taxpayer, including the tax that is in issue
in this case, qualify as taxes on “incomes . . . derived”
within the meaning of the Sixteenth Amendment or instead violate the Direct Tax Clauses of the Constitution. Amicus has a strong professional interest in
resisting attempts by Congress to exceed the constitutional limitations on its taxing power, including the
constitutional prohibition against unapportioned
1
No counsel for a party authored this brief in whole or in
part, and no person other than the amicus and his counsel made
any monetary contribution intended to fund the preparation or
submission of this brief.
2
See, e.g., Mark E. Berg and Fred Feingold, The Deemed Repatriation Tax – A Bridge Too Far?, 158 Tax Notes 1345 (Mar. 5,
2018) [hereinafter, Deemed Repatriation Tax]; Mark E. Berg, Determining Which Taxes are Prohibited Direct Taxes After NFIB,
138 Tax Notes 205 (Jan. 14, 2013); Mark E. Berg, Bar the Exit
(Tax)!: Section 877A, the Constitutional Prohibition Against Unapportioned Direct Taxes and the Realization Requirement, 65
Tax Lawyer 181 (2012) [hereinafter, Exit Tax]; see also Mark E.
Berg, Insight: The Proposed Wealth Tax Would be Unconstitutional, Bloomberg BNA Daily Tax Report (Feb. 15, 2019).
2
direct taxes that are not authorized by the Sixteenth
Amendment.
---------------------------------♦---------------------------------
INTRODUCTION AND
SUMMARY OF ARGUMENT
Congress’ taxing power under the Constitution is
broad but not unlimited. One such limitation is the requirement, stated twice in the Constitution, that federal “direct taxes” must be apportioned among the
states.3 The Sixteenth Amendment provides an exception to this apportionment requirement for “taxes on
incomes, from whatever source derived.”4
The tax at issue in this case (the “Section 965 Tax”)
is imposed under Section 965 of the Internal Revenue
Code of 1986 (the “Code”).5 Under that provision, U.S.
persons such as Petitioners who on a particular date in
2017 (or in some cases 2018) directly, indirectly or by
attribution owned 10% or more of the shares in certain
non-U.S. corporations having a specified level of U.S.
ownership were required to include in their taxable income in 2017 (or in some cases 2018) their pro rata
shares of the previously undistributed post-1986
3
U.S. Const. art. I, §2, cl. 3; id. art. I, §9, cl. 4 (the “Direct
Tax Clauses”).
4
Id. amend. XVI.
5
26 U.S.C. §965, enacted as part of “An Act to Provide for
Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018,” Pub. L. No. 115-97,
§14103(a), 131 Stat. 2054 (2017), commonly referred to as the Tax
Cuts and Jobs Act of 2017.
3
foreign earnings of those corporations (calculated as of
a date in late 2017) as if those undistributed amounts
had been distributed to them. These U.S. shareholders
were subject to federal tax on such deemed distributions at tax rates that varied depending on whether
the U.S. shareholder was a corporation or an individual
(with higher tax rates for individual shareholders than
for corporate shareholders) and were given an option
to pay the resulting federal tax either currently or
spread over eight years.6
It is undisputed that the Section 965 Tax was not
apportioned among the states. As a result, the Section
965 Tax violates the Direct Tax Clauses unless it either
(i) is not a “direct tax” or (ii) is imposed on “incomes . . .
derived” within the meaning of the Sixteenth Amendment. That the sole question before the Court in this
case is whether the Sixteenth Amendment authorizes
a tax on unrealized sums without apportionment, a
question that would be dispositive of this case only if
the tax in question were a direct tax that is imposed on
unrealized sums, suggests strongly that Respondent
acknowledges, as it must, that the Section 965 Tax is a
direct tax that is imposed on sums unrealized by the
taxpayer, i.e., on the deemed distribution by a non-U.S.
corporation to its U.S. shareholders of the post-1986
non-U.S. earnings of the corporation where no such actual distribution was made.
Much of the argument throughout the history of
this case has revolved around the continuing vitality
6
26 U.S.C. §965(a), (c) and (h); see id. §951(a)(1) and (2).
4
of the holding of this Court in Eisner v. Macomber7 that
unrealized amounts do not qualify as “incomes . . . derived” within the meaning of the Sixteenth Amendment.8 It having been amply demonstrated in detail, in
amicus’ publications and elsewhere, that the constitutional realization requirement articulated by this
Court in Macomber has been reaffirmed rather than
repudiated or eroded by this Court and continues to
apply in full force and effect,9 the focus of this brief is
on another aspect of the case.
The Ninth Circuit’s opinion in this case asserted
that a ruling in favor of Petitioners “would also call
into question the constitutionality of many other tax
provisions that have long been on the books,”10 and
7
252 U.S. 189 (1920).
See Moore v. United States, 36 F.4th 930, 935-38 (9th Cir.),
rehearing denied, 53 F.4th 507 (9th Cir. 2022).
9
See, e.g., Exit Tax, supra note 2, at 194-201 (describing in
detail this Court’s holding in Macomber and concluding, after
closely examining each of the decisions of this Court that Respondent and various commentators have cited for the proposition that the Court has repudiated or significantly eroded
Macomber’s central holding that amounts must be realized to constitute Sixteenth Amendment “incomes . . . derived,” that this
Court has reaffirmed rather than repudiating or eroding such
holding); Edward T. Roehner & Sheila M. Roehner, Realization:
Administrative Convenience or Constitutional Requirement?, 8
Tax L. Rev. 173, 176-84 (1953); Henry Ordower, Revisiting Realization: Accretion Taxation, the Constitution, Macomber, and
Mark to Market, 13 Va. Tax Rev. 1, 40-50 (1993); see also National
Federation of Independent Business v. Sebelius, 567 U.S. 519, 571
(2012) (citing Macomber with approval for the proposition that
taxes on personal property are direct taxes).
10
Moore, 36 F.4th at 938. For this proposition, which according to the Ninth Circuit’s opinion “does not control our analysis,”
8
5
stated that “[w]e decline to do so today.”11 Respondent
and some commentators have echoed this concern,
with some magnifying it to an assertion that whole
swaths of the Code would be at constitutional risk if
the Court were to hold for Petitioners in this case. The
purpose of this brief is to allay any such concerns by
demonstrating that these other taxes are not infected
with the infirmity that renders the Section 965 Tax unconstitutional either because they are not direct taxes
or because they are imposed on “incomes . . . derived”
by the taxpayer within the meaning of the Sixteenth
Amendment, or because there is a basis for attributing
the realized income of one taxpayer to another for purposes of those taxes. More specifically, as demonstrated
below, a ruling for Petitioners in this case would not
render unconstitutional the manner in which U.S.
shareholders of controlled foreign corporations, partnerships and their partners, S corporations and their
shareholders, original issue discount or regulated futures contracts are taxed, nor would it implicate the
accrual method of tax accounting.
---------------------------------♦---------------------------------
the Ninth Circuit cites only an article by Professor Bruce Ackerman, which in support of an argument that a federal wealth tax
would be constitutional refers to “a number of provisions of the
Internal Revenue Code that would be unconstitutional if Macomber were good law,” and asserts that none of them “has been
seriously questioned on constitutional grounds.” See Bruce Ackerman, Taxation and the Constitution, 99 Colum. L. Rev. 1, 52 &
n.211 (1999).
11
Moore, 36 F.4th at 938.
6
ARGUMENT
I.
The Section 965 Tax is Constitutionally Infirm Because it is an Unapportioned Direct
Tax that is Not Imposed on Sixteenth
Amendment “Incomes . . . Derived,” With
No Basis for Deeming a Dividend of the
Corporation’s Accumulated Earnings to its
Shareholders
It is well established that the basic distinction between direct and indirect taxes is that direct taxes are
those that are imposed on the owner of property based
solely on ownership, whereas indirect taxes are those
imposed on uses of property such as sales or other
transfers.12 Thus, property taxes of the type that localities routinely impose are direct taxes imposed on the
owner of property based solely on ownership, whereas
property transfer taxes, gift taxes, estate taxes and excise taxes imposed on sales revenues are indirect taxes
imposed on transfers of property.13 It is axiomatic that
this distinction between direct and indirect taxes, a
distinction the existence and constitutional significance of which this Court has recognized as recently as
2012,14 would have no meaning if Congress could
simply deem a sale or other transfer of property to
12
See, e.g., Fernandez v. Wiener, 326 U.S. 340, 352 (1945); see
generally Exit Tax, supra note 2, at 184-92 and the authorities
cited therein.
13
See, e.g., Bromley v. McCaughn, 280 U.S. 124, 136-38
(1929); Eisner v. Macomber, 252 U.S. 189, 217 (1920); Knowlton
v. Moore, 178 U.S. 41, 81-83 (1900).
14
See National Federation, 567 U.S. at 570-71.
7
have taken place, impose a tax on the gain on the
deemed sale and assert that such tax is an indirect tax
by reason of the deemed sale. Otherwise, Congress
could, say, impose a clearly prohibited unapportioned
land tax15 using the device of deeming some or all landowners to have sold their property and imposing an
“indirect tax” on the deemed gains on such deemed
sales.16 This is presumably why Respondent has apparently conceded that the Section 965 tax, which as noted
is a tax on deemed distributions by non-U.S. corporations to their direct and indirect U.S. shareholders of
their undistributed post-1986 earnings, is a direct tax.
Similar considerations apply in determining
whether an unapportioned direct tax such as the Section 965 Tax is a permitted tax on “incomes . . . derived” within the meaning of the Sixteenth
Amendment. In this context, the clear distinction this
Court drew in Macomber between realized income or
gain, which constitutes Sixteenth Amendment income,
and unrealized amounts such as increases in a shareholder’s capital resulting from the corporation’s undistributed profits from prior years,17 which do not, would
15
See id. at 571 (taxes on the ownership of real estate are
direct taxes requiring apportionment).
16
See Helvering v. Independent Life Insurance Co., 292 U.S.
371, 378-379 (1934) (a tax on deemed rental income from a building
occupied by the owner would be a direct tax not imposed on incomes).
17
See Macomber, 252 U.S. at 212 (referring to a corporation’s
“antecedent accumulation of profits” as an increase in its shareholders’ capital that does not constitute Sixteenth Amendment
“incomes . . . derived”); cf. Helvering v. Northwest Steel Rolling
Mills Inc., 311 U.S. 46, 52-53 (1940) (a surtax on the undistributed current income of a corporation is a tax on “incomes” even if
8
have no meaning if Congress could simply deem a taxpayer’s unrealized appreciation to have been realized
as income or gain by the taxpayer and assert that a
direct tax on such deemed income or gain is authorized
by the Sixteenth Amendment as a tax on “incomes . . .
derived.” Yet that is precisely what the Ninth Circuit’s
ruling would, if affirmed by this Court, permit Congress to have done when it enacted the Section 965 Tax
– deem Petitioners to have realized income in 2017 in
an amount equal to their pro rata share of the corporation’s post-1986 accumulated earnings via a deemed
distribution of such capital, impose tax on such deemed
amounts and claim that such tax is a tax on Sixteenth
Amendment “incomes . . . derived.”
To be sure, since Macomber is more concerned
with when Sixteenth Amendment income arises (i.e.,
upon realization) than to whom such realized income
can be taxed,18 Macomber does not necessarily prohibit
the attribution of an amount of realized income or gain
from one taxpayer to another and inclusion of the attributed amount in the gross income of the attributee,
for example one who controls the income even though
it is received by another.19 But this does not mean that
there are no limits on Congress’ ability to attribute the
the corporation’s accumulated deficit was greater than its current
income: “the tax here under consideration was imposed on profits
earned during a definite period – a tax year – and therefore on
profits constituting income within the meaning of the Sixteenth
Amendment”).
18
See Exit Tax, supra note 2, at 204; Deemed Repatriation
Tax, supra note 2, at 1353-54
19
See, e.g., Helvering v. Horst, 311 U.S. 112 (1940); Burnet v.
Wells, 289 U.S. 670 (1933); Corliss v. Bowers, 281 U.S. 376 (1930).
9
income realized by one taxpayer (here, a corporation)
in one year to another taxpayer (here, its shareholder)
in a later year by, say, deeming a dividend to have been
paid. Rather, there are several well-established limitations on such attribution.
First, as noted, this Court in Macomber made it
clear that since a corporation’s accumulated earnings
from prior years represent capital rather than income
vis-à-vis the shareholders of the corporation for purposes of the Sixteenth Amendment, an unapportioned
tax that attributes to the shareholders of a corporation
the corporation’s accumulated earnings from prior
years is a direct tax that is not authorized by the Sixteenth Amendment.20 Thus, when the attribution in
question is of a corporation’s accumulated earnings to
its shareholders, Macomber itself stands in the way of
such attribution. Second, a corporation being a separate taxpayer from its shareholders for federal income
tax purposes,21 there are provisions of the Constitution
other than the Direct Tax Clauses that are implicated
20
See the authorities cited supra at note 17.
Compare 26 U.S.C. §§1, 11, 61(a)(7), 301(c), 311(b) and 336(a)
(treating regular C corporations as separate taxpayers from their
shareholders) with id. §§701-761 (flow-through treatment of partnerships vis-à-vis their partners) and id. §§1361-1379 (flowthrough treatment of S corporations vis-à-vis their shareholders);
cf. id. §§1381-1388 (quasi flow-through treatment of cooperatives
vis-à-vis their patrons), id. §§851-855 (quasi flow-through treatment of regulated investment companies vis-à-vis their shareholders) and id. §§856-859 (quasi flow-through treatment of real
estate investment trusts vis-à-vis their shareholders).
21
10
when one taxpayer (here, a shareholder) is taxed on
the income of another taxpayer (here, a corporation).22
In this connection, while as noted control may be
relevant in determining whether a taxpayer’s realized
income can be attributed to another taxpayer for tax
purposes, control by itself is not enough to justify attribution of one taxpayer’s income to another, any more
than one’s ownership and control of a parcel of land is
sufficient to justify the imposition of federal tax on a
deemed sale of the land by the one who owns and controls it. Rather, the relevant cases establish that there
must be some basis for the attribution of the realized
income of one taxpayer (such as a corporation) to another taxpayer (such as a shareholder of the corporation).23 As will be seen below, what distinguishes the
Section 965 Tax from other taxes that are imposed on
the basis of attribution of a business entity’s income to
its owners is that in each such case there is a basis for
attribution that is lacking in the case of the Section
965 Tax’s attribution of a corporation’s accumulated
earnings to its shareholders.
Thus, the Section 965 Tax is unconstitutional for
the following reasons: (i) the Section 965 Tax, which
unquestionably is not apportioned among the states, is
imposed on owners of shares of certain non-U.S. corporations based solely on their ownership of such shares,
22
See, e.g., Hoeper v. Tax Commission of Wisconsin, 284 U.S.
206 (1931) (taxation of one person on another person’s income violates the Due Process and Equal Protection Clauses of the Fourteenth Amendment).
23
See Deemed Repatriation Tax, supra note 2, at 1354-55.
11
without regard to any actual transfer or other use of
those shares by the owners, and therefore is a direct
tax; (ii) the Section 965 Tax is imposed in the absence
of any realization of income or gain by the shareholders on which it is imposed and therefore is not imposed
on “incomes . . . derived” within the meaning of the Sixteenth Amendment; and (iii) there is no basis for the
attribution for purposes of the Section 965 Tax of a corporation’s accumulated earnings to its shareholders.
As discussed below, few if any of the other federal tax
provisions the constitutionality of which the Ninth Circuit and Respondent suggest would be called into question if this Court rules for Petitioners in this case
suffer from this constitutional infirmity, either because
they are not direct taxes, they are imposed on realized
income of the taxpayer or there is a basis for the attribution of the realized income of one taxpayer to another.
II.
The Other Tax Provisions Cited in this Regard Do Not Suffer from the Same Constitutional Infirmity as the Section 965 Tax
A. The Attribution of Certain Non-U.S.
Corporations’ Current Realized Income to its U.S. Shareholders, Held
Constitutional by Lower Courts, is
Fundamentally Different from the Section 965 Tax on Deemed Distributions
The Ninth Circuit’s opinion below24 and Respondent make much of the Court of Appeals decisions
24
Moore, 36 F.4th at 935-36.
12
upholding the constitutionality of 26 U.S.C. §951,25
suggesting that the Section 965 Tax is constitutional
for the same reasons and arguing that a decision in
favor of Petitioners in this case would mean that 26
U.S.C. §951 also would have to be found to be unconstitutional. This argument is unavailing given the fundamental differences between 26 U.S.C. §951 and the
Section 965 Tax.
Under 26 U.S.C. §951(a), certain types of income
(referred to in the Code as “Subpart F income”) realized by a “controlled foreign corporation” (CFC) in a
particular year are attributed to and included in that
year’s gross income of the U.S. shareholders of the corporation that own at least 10% of the shares of the corporation.26 A CFC is a non-U.S. corporation more than
50% of the shares of which (by vote or value) are
owned, directly, indirectly or by attribution, by U.S.
shareholders each of whom owns at least 10% of the
shares (by vote or value).27 The Code makes it clear
that it is only current-year income of the non-U.S. corporation that can be attributed to those who were U.S.
25
See Garlock v. Commissioner, 489 F.2d 197 (2d Cir. 1973)
(Subpart F inclusion under 26 U.S.C. §951(a)(1)(A) by U.S. shareholders of certain types of current income of a non-U.S. corporation), cert. denied, 417 U.S. 911 (1974); Estate of Whitlock v.
Commissioner, 494 F.2d 1297 (10th Cir.) (inclusion under 26
U.S.C. §951(a)(1)(B) to the extent of the corporation’s current
earnings), cert. denied, 419 U.S. 839 (1974); cf. Eder v. Commissioner, 138 F.2d 27 (2d Cir. 1943) (attribution of current income
under former foreign personal holding company regime).
26
26 U.S.C. §951(a)(1)(A) and (b); see id. §952.
27
26 U.S.C. §§957(a) and (c) and 958.
13
shareholders of the corporation on the last day of the
year in which such income was earned by limiting the
corporation’s Subpart F income for a taxable year to
“the earnings and profits of such corporation for such
taxable year.”28 Congress in 2017 expanded the categories of a CFC’s income that are annually attributed to
its U.S. shareholders to include “global intangible lowtaxed income” (GILTI), but did not change the requirement that all such attributed income be the current
year’s income rather than the accumulated earnings of
the CFC.29
To be sure, the Court of Appeals decisions that
upheld the constitutionality of 26 U.S.C. §951 refer to
the presumed control the U.S. shareholders of a CFC
in a particular year have over the corporation’s income
realized in that year and the perceived abuse that
could result were U.S. shareholders to be able to use
controlled non-U.S. corporations as their “family
28
26 U.S.C. §952(c)(1)(A) (captioned “Subpart F income limited to current earnings and profits”). For federal income tax purposes, a corporation’s “earnings and profits” is an amount that is
computed differently from its taxable income in several respects
(see, e.g., id. §312(n)), which amount determines what portion of
a distribution to shareholders is treated as a taxable dividend as
opposed to a return of capital or a gain from the sale or exchange
of stock. See id. §§301(c), 316 and 312. A corporation can have
current earnings and profits, i.e., earnings and profits arising in
the current year, and accumulated earnings and profits, i.e., the
cumulative amount of earnings and profits (positive and negative)
from inception to a particular date. See id. §316(a)(1) and (2).
29
26 U.S.C. §951A; see id. §951A(c)(2)(A).
14
pocketbooks” for the earning of investment income.30
But significantly, these courts couched their conclusions in terms of constructive receipt by the U.S. shareholders of the corporations’ income31 and, even more
significantly for purposes of this discussion, made a
point of honoring the distinction this Court drew in
Macomber between a corporation’s current income and
its income accumulated in prior years that was undistributed and added to capital, and distinguishing Macomber on that basis.
Thus, in Estate of Whitlock v. Commissioner,32 the
taxpayer argued that a provision of 26 U.S.C. §951 that
taxes U.S. shareholders of a CFC when the CFC invests its earnings in U.S. property33 is an unconstitutional direct tax that is not permitted by the Sixteenth
Amendment. Congress’ rationale for the attribution
under this provision is that a CFC’s investment of
30
See, e.g., Estate of Whitlock v. Commissioner, 59 T.C. 490,
509 (1972) (finding that the taxpayers “had the actual right and
power to manipulate their corporation as if it were the family
pocketbook”), aff ’d on this issue, 494 F.2d 1297 (10th Cir.), cert.
denied, 419 U.S. 839 (1974).
31
See, e.g., Estate of Whitlock, 59 T.C. at 507 (finding that
the corporation’s “earnings and profits were as much petitioners’
income as if petitioners had received such earnings and profits
themselves”); Estate of Whitlock, 494 F.2d at 1301 (“We can add
little to the analysis by the Tax Court of the direct tax argument
. . . of the taxpayers, and agree fully therewith.”); Garlock v. Commissioner, 58 T.C. 423, 438 (1972) (finding “constructive receipt
of income” by the taxpayer), aff ’d, 489 F.2d 197 (2d Cir. 1973),
cert. denied, 417 U.S. 911 (1974).
32
494 F.2d 1297 (10th Cir.), cert. denied, 419 U.S. 839 (1974).
33
26 U.S.C. §951(a)(1)(B); see id. §956(a).
15
earnings in U.S. property is “substantially the equivalent of a dividend being paid to [the U.S. shareholders].”34 The Tenth Circuit affirmed the U.S. Tax Court’s
decision upholding the provision, stating that “[w]e can
add little to the analysis by the Tax Court of the direct
tax argument . . . of the taxpayers, and agree fully
therewith.”35 Observing that “the Macomber majority
was primarily concerned with Congress’ power to tax a
corporation’s undistributed accumulated earnings to
the corporation’s stockholders, and did not linger upon
the question of congressional power to tax a corporation’s current undistributed income to the corporation’s stockholders,”36 the Tax Court stated as follows:
“The reasoning [in Macomber] was that such accumulated earnings constituted the stockholder’s share in
capital, and not income. But we cannot read Macomber
as denying to Congress the power to attribute a corporation’s undistributed current income to the corporation’s controlling stockholders.”37 Similarly, the Second
Circuit in Garlock v. Commissioner38 upheld the attribution of current-year Subpart F income under 26
U.S.C. §951(a)(1)(A), albeit with very little discussion
other than to cite the prior holding of the Second Circuit regarding the analogous attribution of income –
34
S. Rep. No. 87-1881, at 87-88 (1962).
Estate of Whitlock v. Commissioner, 494 F.2d 1297, 1301
(10th Cir.), cert. denied, 419 U.S. 839 (1974).
36
59 T.C. at 509 (emphasis added).
37
Id. at 508 (emphasis added) (citation omitted).
38
489 F.2d 197 (2d Cir. 1973), cert. denied, 417 U.S. 911
(1974).
35
16
also limited to current-year income – under the former
foreign personal holding company regime.39
It is evident from the above discussion that the
Section 965 Tax is fundamentally different from the
tax provisions that were at issue in Whitlock, Garlock
and Eder. Whereas the attribution of a CFC’s Subpart
F income (or for that matter GILTI) under the latter
provisions is uniformly of the corporation’s current
earnings, and thus does not violate this Court’s bar on
unapportioned taxes on shareholders’ capital in the
form of the corporation’s “antecedent accumulation of
profits,”40 the Section 965 Tax by its terms taxes shareholders on the corporation’s earnings accumulated for
up to 30 years, in direct violation of the line clearly
drawn by this Court in Macomber.
And although no Court of Appeals has gone this
far, even the attribution of a corporation’s accumulated
earnings under 26 U.S.C. §951(a)(1)(B), approved by
the Tax Court in Dougherty v. Commissioner,41 is distinguishable from the Section 965 Tax. In Dougherty,
which represents the high-water mark in this area,42
the Tax Court pointed to a combination of the corporation’s investment in U.S. property in the current year
and the U.S. shareholders’ control over the corporation
as, in effect, the basis for deeming a distribution of the
39
Id. at 202-03 & n.5, citing Eder v. Commissioner, 138 F.2d
27 (2d Cir. 1943).
40
Macomber, 252 U.S. at 212.
41
60 T.C. 917 (1973).
42
See Deemed Repatriation Tax, supra note 2, at 1354.
17
corporation’s accumulated earnings to its shareholders, stating in this connection that Congress regarded
the corporation’s investment in U.S. property as “manifesting the shareholder’s exercise of control over the
previous income of the corporation.”43 No similar trigger or basis exists in the case of the Section 965 Tax,
which is imposed solely because the taxpayer was on a
particular date in 2017 or 2018 a U.S. shareholder of a
non-U.S. corporation having a certain degree of U.S.
ownership and accumulated post-1986 earnings. As a
result, the authorities upholding the tax imposed by 26
U.S.C. §951 do not lend support to the Ninth Circuit’s
conclusion, nor would a decision in this case in favor of
Petitioners mean that 26 U.S.C. §951 is also unconstitutional.
B. Even More Fundamentally Different
from the Section 965 Tax on Deemed
Distributions is the Attribution of the
Current Realized Income of a Partnership to its Partners
Respondent, noting the longstanding federal tax
treatment of partnerships and their partners pursuant
to which partners are taxed on their distributive
shares of the partnership’s income without regard to
whether any such amounts are distributed to the partners, argues that the Section 965 Tax is similar to the
attribution of partnership income to partners and that
“[n]othing in the Sixteenth Amendment’s text or
43
60 T.C. at 930.
18
history suggests that the undistributed income of a
CFC must be treated differently from the undistributed income of a partnership.”44 Similarly, the Ninth
Circuit cited the taxation of partners on their distributive shares of the partnership’s income without regard to whether such amounts were actually
distributed to them as an indication that the Sixteenth
Amendment does not require realization.45 These arguments also miss the mark.
The attribution of a partnership’s income to its
partners for federal tax purposes is an annual attribution to the partners of the income realized by the partnership in the current year.46 In this respect, the
taxation of partnerships and their partners is similar
to the current earnings attribution regime found to be
constitutional by the Courts of Appeals in Garlock
and Whitlock and nothing like the Section 965 Tax,
which as noted deems a distribution of up to 30 years
of certain non-U.S. corporations’ accumulated earnings
(i.e., capital) to their U.S. shareholders. That a
44
See Brief of the United States in Opposition, Moore v.
United States, No. 22-800, at 10-11.
45
Moore, 36 F.4th at 935-36 (citing Heiner v. Mellon, 304
U.S. 271 (1938)).
46
26 U.S.C. §706(a) (“In computing the taxable income of a
partner for a taxable year, the inclusions required by section 702
and section 707(c) with respect to a partnership shall be based on
the income, gain, loss, deduction, or credit of the partnership for
any taxable year of the partnership ending within or with the taxable year of the partner.”); see also id. §§701 and 702 (the partners,
rather than the partnership, are subject to tax on their distributive shares of the partnership’s items of income).
19
partnership’s current realized income need not be distributed to the partners in order for the partners to be
taxed on their distributive shares of such income does
not mean that the partners are being taxed on unrealized income. Rather, the partnership’s realized income is being attributed to its partners, which
attribution is a function of the fundamental difference
between corporations and partnerships, and the relationships between those entities and their owners, as
a matter of state law,47 which fundamental difference
is reflected in the tax law:48 While a corporation is always treated as a separate taxpayer from its shareholders for federal tax purposes,49 a partnership is
treated for federal tax purposes as an aggregate of its
partners in most contexts50 and as a separate entity
in certain other contexts.51 The former, aggregate
47
Compare, e.g., Del. Code Ann. tit. 8, §§102(b)(6), 122 and
141(a) (corporations) with id. tit. 6, §§15-301(1) and 15-306(a)
(partnerships).
48
See generally Elliott Manning, Partnerships – Conceptual
Overview, 710-3d Tax Mgmt. Port. (BNA) §I (“The oldest and most
basic partnership form is the general partnership, in which the
partners are individually and unlimitedly liable for partnership
obligations, and, except as modified by the partnership agreement, have equal rights to participate in management and general authority to bind the partnership. . . . Many partnership legal
and tax principles have their origin in this simple form of business entity. . . . Based on the historical picture of the general partnership, partnerships are conduits for tax purposes.”).
49
See the authorities cited supra at note 21.
50
See, e.g., 26 U.S.C. §§701, 702, 721-723, 731-735, 743, 751,
752 and 754.
51
See, e.g., id. §741 (gain or loss realized on the sale or exchange of a partnership interest is generally treated as gain or
20
contexts include taxing the partners rather than the
partnership on their distributive shares of the partnership’s current realized income.52 Nor does this Court’s
opinion in Heiner v. Mellon,53 cited by the Ninth Circuit
for the proposition that the Sixteenth Amendment
does not require realization, so hold or even so suggest,
given that the Court in Mellon addressed a purely statutory issue, did not purport to decide a constitutional
issue and did not even mention Macomber or the Sixteenth Amendment.54
Thus, while the Section 965 Tax is for the reasons
discussed a direct tax imposed solely by reason of a
U.S. shareholder’s ownership of shares in a non-U.S.
corporation and imposed not on realized income or
gain but rather on a deemed distribution of the corporation’s accumulated earnings for which deemed distribution no basis exists, by contrast the attribution of
loss from the sale of a capital asset). But see id. §751(a) (looking
through the partnership to characterize a portion of the amount
realized on such sale or exchange as from the sale or exchange of
an asset that is not a capital asset on the basis of the nature of
the assets of the partnership). See generally H.R. Rep. No. 832543, at 59 (1954) (Conf. Rep.) (“Both the House provisions and
the Senate amendment provide for the use of the ‘entity’ approach
in the treatment of transactions between a partner and a partnership. . . . No inference is intended, however, that a partnership is
to be considered as a separate entity for the purpose of applying
other provisions of the internal revenue laws if the concept of the
partnership as a collection of individuals is more appropriate for
such provisions.”).
52
See, e.g., 26 U.S.C. §§701, 702, 704 and 706(a).
53
304 U.S. 271 (1938).
54
See Exit Tax, supra note 2, at 203.
21
a partnership’s current realized income to its partners
causes the partners to be subject to an indirect tax on
the partnership’s current realized income to the same
extent that a tax imposed on the partnership on its
profits would be an indirect tax on income. As a result,
to the extent the Sixteenth Amendment is relevant to
the attribution of a partnership’s current realized income to its partners, such attribution is entirely consistent with the Sixteenth Amendment.
C. Tax Provisions that Apply at the Election of the Taxpayer, Such as the Attribution of S Corporations’ Current
Realized Income to Their Shareholders, are Not Implicated by the Court’s
Ruling in This Case
Respondent has also suggested that the Section
965 Tax is similar to the attribution of an S corporation’s income to its shareholders and that “[n]othing
in the Sixteenth Amendment’s text or history suggests
that the undistributed income of a CFC must be
treated differently from the undistributed income of
. . . [an] S corporation.”55 Because the attribution under
Subchapter S of the Code56 to an S corporation’s
shareholders is, as is the case with partnerships, an
annual attribution of the S corporation’s current realized income,57 the discussion above regarding
55
See Brief of the United States in Opposition, Moore v.
United States, No. 22-800, at 11.
56
26 U.S.C. §§1361-1379.
57
See 26 U.S.C. §1366(a).
22
partnerships also applies to S corporations. In addition, unlike the attribution under the Section 965 Tax,
the pass-through treatment afforded to S corporations
and their shareholders is entirely elective, such that in
order for such treatment to apply the corporation must
make a timely Subchapter S election and all of the
shareholders of the corporation must consent to the
election.58 These features clearly distinguish the elective attribution of current realized income from an S
corporation to its shareholders from the mandatory attribution of accumulated earnings under the Section
965 Tax, with the result that the existence of Subchapter S of the Code does not lend support to the Ninth
Circuit’s decision, nor would a decision in this case in
favor of Petitioners mean that Subchapter S is also unconstitutional.59
D. The Tax Treatment of Regulated Futures Contracts is Not Implicated by
the Court’s Ruling in This Case
Respondent asserts that “numerous assets are
taxed as if they had been sold for a realized gain at the
end of a taxable year – even if they were not in fact
58
See 26 U.S.C. §§1361(a)(1) and 1362(a)(1) and (2).
Similar considerations apply to the elective flow-through
treatment afforded to U.S. shareholders of “passive foreign investment companies” who make a “qualified electing fund” election with respect to the company under 26 U.S.C. §1295(b). See
id. §§1293 (attribution of current realized income of qualified
electing funds to electing U.S. shareholders) and 1297(a) (definition of passive foreign investment company).
59
23
sold – including regulated futures contracts.”60 In this
connection, Respondent refers to 26 U.S.C. §1256(a)
and (b), pursuant to which holders of certain contracts
such as regulated futures contracts are required to
mark their positions to market and treat such positions as having been sold for their fair market value at
the close of each year, as “materially comparable” to
the Section 965 Tax, and cites Murphy v. United
States61 as “rejecting the argument that Section 1256
‘is unconstitutional because it taxes unrealized
gains.’ ”62
The court in Murphy, however, did not distance itself from Macomber but rather applied it to the facts of
the case. In this connection, the court determined that
Congress based the treatment under 26 U.S.C. §1256
on the particular arrangements applicable to the futures contracts, under which “traders holding futures
contracts were entitled to withdraw their gains at the
close of every day under the marked-to-market system.”63 From this, the court concluded that “Section
1256 is premised on the doctrine of constructive receipt
because the taxpayer who trades futures contracts receives profits as a matter of right daily” and held that
“[a]lthough [the taxpayer] did not sell his futures contracts, his gains would be treated as realized because
60
See Brief of the United States in Opposition, Moore v.
United States, No. 22-800, at 11.
61
992 F.2d 929 (9th Cir. 1993).
62
See Brief of the United States in Opposition, Moore v.
United States, No. 22-800, at 11.
63
992 F.2d at 931.
24
he was entitled to withdraw those gains daily.”64 In
conclusion, the court stated the following:
Because of the unique accounting method governing futures contracts, the gains inherent in
them are properly treated as constructively
received. Congress acted well within its authority when it decided to treat them differently from other capital assets. . . . We need
not, and do not, decide the broader issue of
whether Congress could tax the gains inherent in capital assets prior to realization or
constructive receipt.65
Thus, the court in Murphy did not hold or even imply that Macomber does not prohibit deemed-realization taxes such as the Section 965 Tax, but rather
found that the tax under 26 U.S.C. §1256 is consistent
with Macomber because realization had occurred in
that case. Thus, a ruling in this case for Petitioners
would not mean that 26 U.S.C. §1256 is also unconstitutional.
E. Methods of Tax Accounting are Also
Not Implicated by the Court’s Ruling in
This Case
Certain commentators66 have even suggested that
a ruling for Petitioners in this case would open the
64
Id.
Id. at 931-32.
66
See Monte A. Jackel, Potential Implications of Supreme
Court Review in Moore Case (Jul. 11, 2023), available at
65
25
floodgates and bring into question methods of tax accounting such as the accrual method67 and timing rules
such as those that impute interest on the basis of the
time value of money.68 While the contours of such an
argument are not entirely clear, it appears to proceed
from the erroneous proposition that realization means
the receipt of cash, so that methods of tax accounting
under which amounts may be included in income for
tax purposes before such time as the taxpayer receives
cash permit taxation prior to realization. From there,
the argument apparently concludes that if the Section
965 Tax is unconstitutional then so are methods of tax
accounting such as the accrual method. Indeed, the
Ninth Circuit appears to have gotten caught up in this
type of thinking, seemingly confusing realization with
the receipt of cash.69
But the proposition on which such an argument is
based is false, as realization of income does not require
the receipt of cash. Rather, the timing of the realization
of income is entirely a function of the taxpayer’s
method of accounting – a taxpayer on the cash method
generally realizes income when the amount is either
received or constructively received, whereas a taxpayer on the accrual method generally realizes income
when “all the events have occurred which fix the right
https://medium.com/jackeltaxlaw/potential-implications-of-supremecourt-review-in-moore-case-ba4d64f3c4f7.
67
See 26 U.S.C. §451(a); Treas. Reg. §1.451-1(a).
68
See 26 U.S.C. §§483, 1271-1275 and 7872.
69
Moore, 36 F.4th at 935-36 (discussing Mellon and Eder in
terms of whether actual distributions of income had occurred).
26
to receive such income and the amount thereof can be
determined with reasonable accuracy,”70 which of
course can (and often does) occur prior to the taxpayer’s receipt of any cash. In either case, since any
method of tax accounting “starts with realized income
and assigns it to particular taxable years,”71 the
amount in question is treated as income at the time
(not before) it is realized. Thus, the idea that under the
accrual method amounts are included in income prior
to realization, and thus that a ruling for Petitioners in
this case would call into question the accrual method
of accounting, is simply incorrect.72
Similarly, the original issue discount provisions in
some cases impute interest income to a lender and in
others treat a portion of what otherwise would be
treated as gain on a sale as interest income.73 These
rules of character and timing also do not tax unrealized gains. Rather, the rules constitute a method of accounting that, in the case of a lender, recharacterizes
certain principal payments as interest and accrues
that interest ratably over the period of the loan and, in
the case of sales transactions, recharacterizes certain
realized gains as interest. Nothing about the original
70
See Treas. Reg. §1.451-1(a).
See Exit Tax, supra note 2, at 209-10 (discussing the accrual method and the installment sale rules).
72
Moreover, the vast majority of taxes that are imposed at a
particular time by reason of a taxpayer’s method of tax accounting
will not be direct taxes but rather will be taxes resulting from
actual transfers of property or other transactions. See supra notes
12 & 13 and accompanying text.
73
See, e.g., 26 U.S.C. §§1272 and 1274.
71
27
issue discount rules is inconsistent with the realization principle established by this Court in Macomber,
with the result that a ruling in this case for Petitioners
would not mean that these provisions are also unconstitutional.
---------------------------------♦---------------------------------
CONCLUSION
In order for an unapportioned federal tax to be unconstitutional on the same grounds as the Section 965
Tax, the tax must be (a) imposed on the owner of property in the absence of a transaction involving that
property or other use of that property (i.e., a direct tax)
and (b) imposed on something other than realized income or gain (i.e., a tax not permitted by the Sixteenth
Amendment). As discussed above, because the “many
other tax provisions that have long been on the books”
that the Ninth Circuit, Respondent and others have
suggested would also be “call[ed] into question” were
this Court to reverse the Ninth Circuit’s judgment below74 clearly do not fit this description, a reversal of the
Ninth Circuit’s judgment below would not open the
floodgates and cause numerous longstanding provisions of the Code to be at constitutional risk.
74
Moore, 36 F.4th at 938.
28
Accordingly, the Ninth Circuit’s judgment below
should be reversed.
Respectfully submitted,
WILLIAM A. HARVEY
Counsel of Record
KLEHR HARRISON HARVEY
BRANZBURG LLP
1835 Market Street
Suite 1400
Philadelphia, PA 19103
(215) 569-3003
wharvey@klehr.com
SEPTEMBER 2023
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.