December 8, 2023
Report on recent US international tax developments — 8 December 2023
The US Supreme Court heard oral arguments in the Moore v. United States tax case on 5 December, in which the taxpayer argued the transition tax under Section 965 violates the Constitution's Apportionment Clause and the Due Process Clause of the Fifth Amendment because the transition tax was a direct tax on unrealized income. Comments from the Justices seemed to indicate they were inclined to uphold the transition tax in the 2017 TCJA.
Justice Brett Kavanaugh said during arguments: "The entity realized income. The question then is attribution, and we've long held that Congress may attribute the income of the company to the shareholders or the partnership to the partners." Moore is seen as potentially having ramifications for any future wealth tax.
Congress is scheduled to be in session next week before planned adjournment for the holidays on 14 December for the House and 15 December for the Senate. Those dates for adjournment could slip, however.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), International Tax and Transaction Services, Washington, DC
Published by NTD's Tax Technical Knowledge Services group; Carolyn Wright, legal editor