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Moore v. United States, appeal to Supreme Court on direct taxation
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Adam H. Kerman
Jun 24, 2023, 12:25:46 PM6/24/23
to
Moore v. United States is relisted. The Supreme Court hasn't yet granted the
appeal.
This is of interest as it's about direct taxes. Unapportioned
direct taxes are unconstitutional under Article I Section 9. The 16th
Amendment, which made income taxes contitutional without apportionment, is
an exception to the unconstitutionality of unapportioned direct taxes; the
provision was otherwise left in place.
A Trump-era amendment to the Internal Revenue Act taxes corporate earnings
abroad on a one-time basis. The Moores owned 1/6 of a company supplying
equipment to farmers in poor regions of India. The company was profitable
but didn't pay dividends as dividends were always reinvested.
The Moores paid the tax but challenged it as an unapportioned direct tax.
They lost at the Ninth Circuit because the Supreme Court has ruled that
unrealized income may be taxed.
I'm keeping an eye on this.
https://www.scotusblog.com/2023/06/the-constitutionality-of-wealth-taxes-plus-educational-benefits-for-veterans/
https://casetext.com/case/moore-v-united-states-2125
Here's a nice summary of the constitutional implications of direct and
indirect taxes:
https://constitutioncenter.org/the-constitution/articles/article-i/clauses/757
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appeal.
This is of interest as it's about direct taxes. Unapportioned
direct taxes are unconstitutional under Article I Section 9. The 16th
Amendment, which made income taxes contitutional without apportionment, is
an exception to the unconstitutionality of unapportioned direct taxes; the
provision was otherwise left in place.
A Trump-era amendment to the Internal Revenue Act taxes corporate earnings
abroad on a one-time basis. The Moores owned 1/6 of a company supplying
equipment to farmers in poor regions of India. The company was profitable
but didn't pay dividends as dividends were always reinvested.
The Moores paid the tax but challenged it as an unapportioned direct tax.
They lost at the Ninth Circuit because the Supreme Court has ruled that
unrealized income may be taxed.
I'm keeping an eye on this.
https://www.scotusblog.com/2023/06/the-constitutionality-of-wealth-taxes-plus-educational-benefits-for-veterans/
https://casetext.com/case/moore-v-united-states-2125
Here's a nice summary of the constitutional implications of direct and
indirect taxes:
https://constitutioncenter.org/the-constitution/articles/article-i/clauses/757
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
John Levine
Jun 24, 2023, 1:25:57 PM6/24/23
to
It appears that Adam H. Kerman <a...@chinet.com> said:
>Moore v. United States is relisted. The Supreme Court hasn't yet granted the
>appeal.
Don't get your hopes up. There are 191 petitions left and they will
>Moore v. United States is relisted. The Supreme Court hasn't yet granted the
>appeal.
accept maybe five of them. I suspect the relist is because two or
three of the usual suspects like it, probably the same ones who like
the absurd Moore vs Harper election law case, hoping they can round
up one more vote.
--
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly
Adam H. Kerman
Jun 24, 2023, 6:46:59 PM6/24/23
to
John Levine <jo...@taugh.com> wrote:
>It appears that Adam H. Kerman <a...@chinet.com> said:
>>Moore v. United States is relisted. The Supreme Court hasn't yet granted the
>>appeal.
>Don't get your hopes up. There are 191 petitions left and they will
>accept maybe five of them. I suspect the relist is because two or
>three of the usual suspects like it, probably the same ones who like
>the absurd Moore vs Harper election law case, hoping they can round
>up one more vote.
You've whooshed me.
>It appears that Adam H. Kerman <a...@chinet.com> said:
>>Moore v. United States is relisted. The Supreme Court hasn't yet granted the
>>appeal.
>Don't get your hopes up. There are 191 petitions left and they will
>accept maybe five of them. I suspect the relist is because two or
>three of the usual suspects like it, probably the same ones who like
>the absurd Moore vs Harper election law case, hoping they can round
>up one more vote.
Note: Completely different appellant
Moore v Harper would test the independent state legislature theory.
That's nothing to do with unapportioned direct taxation. I don't even
see how it would have the same majority.
As far as the independent state legislature theory, if that's a VALID
theory, then our Founding Fathers are absolutely subject to criticism as
that's simply the result of a massive drafting error in the
Constitution. If it's an invalid theory, then federal courts are being
asked to ignore plain language in the Constitution.
It's along the lines privileges OR immunities versus privilege AND
immunities.
John Levine
Jun 24, 2023, 6:46:59 PM6/24/23
to
According to Adam H. Kerman <a...@chinet.com>:
was not paid out, and assert that courts have always said that you
only owe tax on income you have received.
That's just false. Zero coupon bonds are sold at a discount and
redeemed at face value. Each year the value of the bond is a little
more as it gets closer to the maturity date, with the increase called
imputed interest. Even though you don't get that imputed interest, you
have to pay taxes on it each year. (If somone's about to ask what
about US Savings Bonds, they have a special exception.)
I doubt SCOTUS has an appetite to screw up the entire bond market for
the benefit of some guy with a small investment in an Indian firm.
Keep in mind that this argument is just about timing. You owe tax
either way, the question only being when you pay it.
R's,
John
>equipment to farmers in poor regions of India. The company was profitable
>but didn't pay dividends as dividends were always reinvested.
>
>The Moores paid the tax but challenged it as an unapportioned direct tax.
>They lost at the Ninth Circuit because the Supreme Court has ruled that
>unrealized income may be taxed.
Their argument seems to be that they don't owe tax because the income
>but didn't pay dividends as dividends were always reinvested.
>
>The Moores paid the tax but challenged it as an unapportioned direct tax.
>They lost at the Ninth Circuit because the Supreme Court has ruled that
>unrealized income may be taxed.
was not paid out, and assert that courts have always said that you
only owe tax on income you have received.
That's just false. Zero coupon bonds are sold at a discount and
redeemed at face value. Each year the value of the bond is a little
more as it gets closer to the maturity date, with the increase called
imputed interest. Even though you don't get that imputed interest, you
have to pay taxes on it each year. (If somone's about to ask what
about US Savings Bonds, they have a special exception.)
I doubt SCOTUS has an appetite to screw up the entire bond market for
the benefit of some guy with a small investment in an Indian firm.
Keep in mind that this argument is just about timing. You owe tax
either way, the question only being when you pay it.
R's,
John
--
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly
Stuart O. Bronstein
Jun 24, 2023, 9:22:23 PM6/24/23
to
"John Levine" <jo...@taugh.com> wrote in news:u77gbn$lkn$1...@gal.iecc.com:
accrual taxpayers, partners and S-corporation shareholders, money is
taxed when it's earned, not when it's received. It's all treated as
income, even though not received. And that takes it out of the
apportionment clause.
> I doubt SCOTUS has an appetite to screw up the entire bond market for
> the benefit of some guy with a small investment in an Indian firm.
> Keep in mind that this argument is just about timing. You owe tax
> either way, the question only being when you pay it.
Someone said the 9th circuit is overruled a lot. It's not. It's the
second most overruled circuit, at about a 6% overrule rate the last time
I checked. So it's not likely to be overtured even though it is the 9th
circuit.
--
Stu
http://DownToEarthLawyer.com
> Adam H. Kerman <a...@chinet.com>:
>>equipment to farmers in poor regions of India. The company was
>>profitable but didn't pay dividends as dividends were always
>>reinvested.
>>
>>The Moores paid the tax but challenged it as an unapportioned direct
>>tax. They lost at the Ninth Circuit because the Supreme Court has
>>ruled that unrealized income may be taxed.
>
> Their argument seems to be that they don't owe tax because the income
> was not paid out, and assert that courts have always said that you
> only owe tax on income you have received.
>
> That's just false. Zero coupon bonds are sold at a discount and
> redeemed at face value. Each year the value of the bond is a little
> more as it gets closer to the maturity date, with the increase called
> imputed interest. Even though you don't get that imputed interest, you
> have to pay taxes on it each year. (If somone's about to ask what
> about US Savings Bonds, they have a special exception.)
That's right. When there is a statute to that effect, such as with
>>equipment to farmers in poor regions of India. The company was
>>profitable but didn't pay dividends as dividends were always
>>reinvested.
>>
>>The Moores paid the tax but challenged it as an unapportioned direct
>>tax. They lost at the Ninth Circuit because the Supreme Court has
>>ruled that unrealized income may be taxed.
>
> Their argument seems to be that they don't owe tax because the income
> was not paid out, and assert that courts have always said that you
> only owe tax on income you have received.
>
> That's just false. Zero coupon bonds are sold at a discount and
> redeemed at face value. Each year the value of the bond is a little
> more as it gets closer to the maturity date, with the increase called
> imputed interest. Even though you don't get that imputed interest, you
> have to pay taxes on it each year. (If somone's about to ask what
> about US Savings Bonds, they have a special exception.)
accrual taxpayers, partners and S-corporation shareholders, money is
taxed when it's earned, not when it's received. It's all treated as
income, even though not received. And that takes it out of the
apportionment clause.
> I doubt SCOTUS has an appetite to screw up the entire bond market for
> the benefit of some guy with a small investment in an Indian firm.
> Keep in mind that this argument is just about timing. You owe tax
> either way, the question only being when you pay it.
second most overruled circuit, at about a 6% overrule rate the last time
I checked. So it's not likely to be overtured even though it is the 9th
circuit.
--
Stu
http://DownToEarthLawyer.com
Adam H. Kerman
Jun 24, 2023, 11:42:41 PM6/24/23
to
John Levine <jo...@taugh.com> wrote:
>According to Adam H. Kerman <a...@chinet.com>:
>>equipment to farmers in poor regions of India. The company was profitable
>>but didn't pay dividends as dividends were always reinvested.
>>The Moores paid the tax but challenged it as an unapportioned direct tax.
>>They lost at the Ninth Circuit because the Supreme Court has ruled that
>>unrealized income may be taxed.
>Their argument seems to be that they don't owe tax because the income
>was not paid out, and assert that courts have always said that you
>only owe tax on income you have received.
The dividend must be issued, at least put on the books, in order to be
>According to Adam H. Kerman <a...@chinet.com>:
>>equipment to farmers in poor regions of India. The company was profitable
>>but didn't pay dividends as dividends were always reinvested.
>>The Moores paid the tax but challenged it as an unapportioned direct tax.
>>They lost at the Ninth Circuit because the Supreme Court has ruled that
>>unrealized income may be taxed.
>Their argument seems to be that they don't owe tax because the income
>was not paid out, and assert that courts have always said that you
>only owe tax on income you have received.
re-invested. When would that occur, at year end or throughout the year?
Sound like an informal process.
>That's just false. Zero coupon bonds are sold at a discount and
>redeemed at face value. Each year the value of the bond is a little
>more as it gets closer to the maturity date, with the increase called
>imputed interest. Even though you don't get that imputed interest, you
>have to pay taxes on it each year.
cash.
>(If somone's about to ask what about US Savings Bonds, they have
>a special exception.)
>I doubt SCOTUS has an appetite to screw up the entire bond market for
>the benefit of some guy with a small investment in an Indian firm.
>Keep in mind that this argument is just about timing. You owe tax
>either way, the question only being when you pay it.
Stuart O. Bronstein
Jun 25, 2023, 11:44:45 AM6/25/23
to
"Adam H. Kerman" <a...@chinet.com> wrote:
corporations. So the normal requirements didn't apply. For that
situation it was taxed much like a partnership or S-corporation.
>>That's just false. Zero coupon bonds are sold at a discount and
>>redeemed at face value. Each year the value of the bond is a little
>>more as it gets closer to the maturity date, with the increase called
>>imputed interest. Even though you don't get that imputed interest, you
>>have to pay taxes on it each year.
>
> Isn't this original issue discount? I get 1099s for this each year. No
> cash.
>
>>(If somone's about to ask what about US Savings Bonds, they have
>>a special exception.)
>
>>I doubt SCOTUS has an appetite to screw up the entire bond market for
>>the benefit of some guy with a small investment in an Indian firm.
>>Keep in mind that this argument is just about timing. You owe tax
>>either way, the question only being when you pay it.
--
Stu
http://DownToEarthLawyer.com
> John Levine <jo...@taugh.com> wrote:
>> Adam H. Kerman <a...@chinet.com>:
>
>>>equipment to farmers in poor regions of India. The company was
>>>profitable but didn't pay dividends as dividends were always
>>>reinvested.
>
>>>The Moores paid the tax but challenged it as an unapportioned direct
>>>tax. They lost at the Ninth Circuit because the Supreme Court has
>>>ruled that unrealized income may be taxed.
>
>>Their argument seems to be that they don't owe tax because the income
>>was not paid out, and assert that courts have always said that you
>>only owe tax on income you have received.
>
> The dividend must be issued, at least put on the books, in order to be
> re-invested. When would that occur, at year end or throughout the
> year? Sound like an informal process.
This was a special case - a one-time tax for controlled foreign
>> Adam H. Kerman <a...@chinet.com>:
>
>>>equipment to farmers in poor regions of India. The company was
>>>profitable but didn't pay dividends as dividends were always
>>>reinvested.
>
>>>The Moores paid the tax but challenged it as an unapportioned direct
>>>tax. They lost at the Ninth Circuit because the Supreme Court has
>>>ruled that unrealized income may be taxed.
>
>>Their argument seems to be that they don't owe tax because the income
>>was not paid out, and assert that courts have always said that you
>>only owe tax on income you have received.
>
> The dividend must be issued, at least put on the books, in order to be
> re-invested. When would that occur, at year end or throughout the
> year? Sound like an informal process.
corporations. So the normal requirements didn't apply. For that
situation it was taxed much like a partnership or S-corporation.
>>That's just false. Zero coupon bonds are sold at a discount and
>>redeemed at face value. Each year the value of the bond is a little
>>more as it gets closer to the maturity date, with the increase called
>>imputed interest. Even though you don't get that imputed interest, you
>>have to pay taxes on it each year.
>
> Isn't this original issue discount? I get 1099s for this each year. No
> cash.
>
>>(If somone's about to ask what about US Savings Bonds, they have
>>a special exception.)
>
>>I doubt SCOTUS has an appetite to screw up the entire bond market for
>>the benefit of some guy with a small investment in an Indian firm.
>>Keep in mind that this argument is just about timing. You owe tax
>>either way, the question only being when you pay it.
--
http://DownToEarthLawyer.com
John Levine
Jun 25, 2023, 7:05:50 PM6/25/23
to
According to Adam H. Kerman <a...@chinet.com>:
>>That's just false. Zero coupon bonds are sold at a discount and
>>redeemed at face value. ...
>Isn't this original issue discount? I get 1099s for this each year. No
>cash.
The only zeros the US government issues are T bills, with maturities
from 4 to 52 weeks.
For longer term bonds, a dealer can separate a note or bond into
STRIPS, in which each interest payment and the principal turn into a
separate security with a separate CUSIP. If you start with a 10 year
bond with semi-annual interest payments, that turns into 21 STRIPS,
twenty small ones for the interest and one big one at the end. It's
less common but also possible to take all of the remaining coupons and
principal and put the bond back together.
--
Regards,
John Levine, jo...@taugh.com, Primary Perpetrator of "The Internet for Dummies",
Please consider the environment before reading this e-mail. https://jl.ly
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