The Supreme Court will hear oral arguments in early December on a case that has the potential to broadly reshape the U.S. tax code.
At issue in Moore v. United States is the question of whether the federal government can tax certain types of “unrealized” gains, which are property like stocks or bonds that people own but from which they haven’t directly recouped the value, so they don’t have direct access to the money that the property is worth.
The decision could have implications for everything from potential wealth taxes, like the one the Biden administration proposed for billionaires in 2022, to large swaths of the international tax regime.
The dispute arose from businesspeople Charles and Kathleen Moore’s investment in an Indian company that sells farm equipment.
Critics of a blanket constitutional requirement for realization say the idea is trumped up, and it’s really just about the timing of when an asset is allowed to be taxed for accounting purposes.
They point to a 1940 decision in Helvering v. Horst finding that “the rule that income is not taxable until realized has never been taken to mean that the taxpayer … can escape taxation because he has not himself received payment of it from his obligor.”