Analyzing Moore: The ruling that upheld the Sec. 965 transition tax

Tony Nitti, CPA, discusses a recent U.S. Supreme Court decision that some observers viewed as having the potential for wide-ranging changes in tax law. In the end, the decision was a narrow one, but the details of what was addressed and what wasn’t make for an interesting conversation on this collaborative podcast episode.

Nitti, partner–National Tax at EY, joins April Walker, CPA, CGMA, lead manager–Tax Practice & Ethics at AICPA & CIMA, for this episode, jointly produced by the JofA and the Tax Section Odyssey podcast.

On June 20, the Supreme Court upheld the constitutionality of the Sec. 965 transition tax in a narrow opinion that applies only to passthrough entities (Moore, No. 22-800 (U.S. 6/20/24)). The Court found it was not required to address whether it is a constitutional requirement that income must be realized before it can be taxed.

Nitti and Walker discussed the ruling in a late June recording.

Resources:

n  The unabridged version of the Walker and Nitti conversation on the Tax Section Odyssey page.

n  Journal of Accountancy news coverage of the June 20 Supreme Court ruling.

n  A November 2023 conversation about the Moore case.

What you’ll learn from this episode:

·         Details of the Supreme Court vote and the facts of the Moore case.

·         Why Nitti said that an expected “showdown” didn’t happen.

·         What Nitti observed about the case from its oral arguments in late 2023.

·         How the case could open up further discussion on the taxation of unrealized gains and the constitutionality of a wealth tax.

·         The value, in Nitti’s eyes, of reading the dissenting opinions.