Moore et ux . v. United States

Notable Items:

• That said, we emphasize that our holding today is narrow. It is limited to:
  • (i) taxation of the shareholders of an entity,
  • (ii) on the undistributed income realized by the entity,
  • (iii) which has been attributed to the shareholders,
  • (iv) when the entity itself has not been taxed on that income. [pass-through entity]
• In other words, our holding applies when Congress treats the entity as a pass-through.
• Barrett's concurrence in judgement may be a pre-emptive opinion regarding a wealth tax.

Petitioner: Charles G. Moore, et. ux.
Respondent: United States of America
Venue: Supreme Court of the United States
Opinion of the Court: Moore v. United States (2024)

Issue(s) Before the Court:

Petitioner's Claim(s):

Respondent's Claim(s):

Holding(s) and Disposition:

Material Facts:

• A full recounting of the facts is available below

Procedural History:

• The Moores paid that amount [taxes owned], then sued for a refund.
• The District Court dismissed the suit, and the U. S. Court of Appeals for the Ninth Circuit affirmed.
• The Moores sought review in this Court, raising only their Direct Tax Clause argument.

Rationale

Majority Opinion (Kavanaugh, Roberts, Sotomayor, Kagan, Jackson)

• In 1895, however, in Pollock v. Farmers’ Loan & Trust Co., this Court held that a tax on income from property equated to a tax on the property itself, and thus was a direct tax that had to be apportioned among the States. 158 U. S. 601, 627–628.
• Congress and the States responded to Pollock by approving a new constitutional amendment. Ratified in 1913, the Sixteenth Amendment rejected Pollock’s conflation of (i) income from property and (ii) the property itself.
• Critically, however, the MRT does tax realized income—namely, income realized by the corporation, KisanKraft. The MRT attributes the income of the corporation to the shareholders, and then taxes the shareholders (including the Moores) on their share of that undistributed corporate income.
• Next, in 1938 in Heiner v. Mellon, the Court again addressed a situation closely akin to the Moores’ case here—a tax on partners for the undistributed income of their partnership. 304 U. S. 271.
• The Court reaffirmed that Congress may choose to tax either the partnership or the partners on the partnership’s undistributed income.
• So by 1938, this Court’s precedents had established a clear rule that directly contradicts the Moores’ argument in this case. That line of precedent remains good law to this day.
• In any event, the Moores’ attempted distinctions of the various taxes fail on their own terms.
• First, the Moores contend that partners can be taxed on a partnership’s income only because, as of the time that the Sixteenth Amendment was ratified in 1913, partnerships were not seen as legal entities separate from the partners. But that assertion is incorrect.
• Second, the Moores seek to distinguish the taxation of S corporations by saying that shareholders’ choice to become an S corporation necessarily means that the S corporation’s income is truly the shareholders’ income. In short, the Moores’ consent theory does not explain Congress’s authority to tax the shareholders of S corporations directly on corporate income.
• Third, the Moores try to distinguish Congress’s long history of taxing shareholders of closely held foreign corporations—including through subpart F—on the ground that those laws apply “the doctrine of constructive realization.”
• ... the Moores’ constructive-realization theory does not distinguish the MRT from subpart F and other pass-through taxes. If subpart F is not unconstitutional under the “constructive realization” theory—and the Moores explicitly concede that it is not, Tr. of Oral Arg. 9—then the MRT is likewise not unconstitutional on that theory.
• A full description of the rationale is available below

Jackson Concurrance

• Our Constitution grants Congress “plenary power” over taxation. Brushaber v. Union Pacific R. Co., 240 U. S. 1, 13 (1916). The text supplies only two relevant conditions: Direct taxes must be apportioned among the States based on population, see Art. I, §9; all other taxes must “be uniform throughout the United States,” §8.
• Pollock v. Farmers’ Loan & Trust Co., 158 U. S. 601 (1895). In that case, the Court invalidated a federal income tax, holding that a tax on income derived from property was a direct tax requiring apportionment.
• In 1913, the People’s representatives responded, using their power to overturn Pollock via constitutional amendment. The Sixteenth Amendment restored to Congress the power to tax “incomes, from whatever source derived, without apportionment.”
• I write separately to emphasize that, before taking up petitioners’ invitation to strike down a lawfully enacted tax, the Court would need to be persuaded of several additional arguments that we wisely do not reach. I highlight two.
• First, we would need to agree with petitioners that Congress can tax income only if it is actually received or “realized.” Moreover, both before and after the Sixteenth Amendment was adopted, the term “income” was widely recognized as flexible enough to include both realized and unrealized gains. See Brief for United States 14–26 (collecting sources); Brief for Professors of Tax Law et al. as Amici Curiae 6–20 (same). [emphasis added]
• The alleged realization requirement is, instead, drawn from a decision of this Court, Eisner v. Macomber, 252 U. S. 189 (1920).
• Over the two decades that followed our pronouncement, we “limited” Macomber’s realization requirement “to the kind of dividend there dealt with,” [Helvering v. Griffiths] 318 U. S., at 375, while also “undermin[ing] . . . the original theoretical bases of the decision in” other contexts, id., at 394.
• Thus, there is no constitutional requirement, from Macomber or otherwise, that a taxpayer “be able to sever ... the gain from his original capital” in order to be taxed on it. Helvering v. Bruun, 309 U. S. 461, 469 (1940) see also Cottage Savings Assn. v. Commissioner, 499 U. S. 554, 559 (1991) (explaining that, properly understood, “the concept of realization is ‘founded on administrative convenience,’ ” compared to the “ ‘cumbersome’ ” process of “valuing assets on an annual basis to determine ... appreciat[ion]”). [marked rejection of realization and support for a wealth tax (appreciation)]
• Second, even if we were to hold that a uniform tax violated the Sixteenth Amendment, we would still need to confirm that the tax was a direct tax before requiring apportionment. [emphasis added]
• But the Constitution does expressly exclude certain taxes—“Duties, Imposts and Excises”—from apportionment, and we have long interpreted those categories of taxes broadly.
• Indeed, we have upheld uniform taxes as excises, even when predicated on something that, if taxed on its own, might require apportionment or even be nontaxable. See Flint v. Stone Tracy Co., 220 U. S. 107, 150–152, 165 (1911).
• In this case, the Government argues that the MRT can be understood as an excise tax on the privilege of doing business through a controlled foreign corporation. See Brief for United States 46–49. That argument, too, would need to be considered before we could strike down a uniform tax like the MRT.
• * * *
• [Quote from Harlan dissenting in Pollack]

Barrett Concurrance in judgement (Alito)

• This case comes down to two questions. Have the Moores realized income from their KisanKraft shares? And if they have not, may Congress attribute KisanKraft’s income to the Moores?
• Our precedent already decides the first question: Shareholders receive income when they sell their shares or when a corporation distributes profits back to its investors by declaring a dividend.
• Notwithstanding this precedent, the Government asserts its power to tax without apportionment all economic gains, including appreciation in property value. The Court does not address this issue.
• It [this Court] focuses on the second instead, and, casting our precedent as well settled, holds that Congress can attribute KisanKraft’s income to the Moores.
• I
• The question on which we granted review is “[w]hether the Sixteenth Amendment authorizes Congress to tax unrealized sums without apportionment among the states.” Pet. for Cert. i. The answer is straightforward: No.
• I A
• The Sixteenth Amendment overruled Pollock’s second holding, stating that “Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment.” But it did not overrule Pollock’s first holding that taxes on personal property are direct taxes. See Brushaber v. Union Pacific R. Co., 240 U. S. 1, 19 (1916); National Federation of Independent Business v. Sebelius, 567 U. S. 519, 571 (2012).
• The Sixteenth Amendment’s reference to income “derived” from any source encompasses a requirement that income, to be taxed without apportionment, must be realized. See post, at 23–25 (Thomas, dissenting).
• I B
• The Moores have not realized income from their KisanKraft shares. ... KisanKraft has never declared a dividend. Nor have the Moores realized income by selling or otherwise dispos- ing of their shares.
• The Government ... looking at property value across two points in time makes a difference, the Government says, because then the tax targets appreciation rather than the asset’s value. As the Government sees it, Congress may tax without apportionment “all economic gains” measured “ ‘between two points in time.’
• The Government is unable to cite a single decision upholding an unapportioned tax on appreciation. That is no surprise, because our precedent forecloses the Government’s argument. We have explained that income includes neither “a gain accruing to capital” nor “a growth or increment of value in the investment.” [Barrett speaking of appreciation, not attribution in pass-through entities.]
• I C
• ... this Court has “never abandoned the core requirement that income must be realized to be taxable without apportionment.”
• What we have done is reject efforts to narrow what it means to realize income.
• The common thread is that to realize income, one must receive something new and valuable beyond the property she already owns.
• II
• Though the Moores did not realize income as shareholders, KisanKraft realized income as a corporation ....
• But the question is not whether some taxable person or entity has realized income at some point. Rather, as the Court emphasizes, we must determine whether Congress has the power to tax the Moores on income that KisanKraft realized.
• As I understand our precedent, it leaves room for Congress to disregard the corporate form in some circumstances. But that is not because Congress—as the Court suggests—can treat corporations interchangeably with partnerships, whose partners have always been subject to pass-through taxation on the partnership’s income. See United States v. Basye, 410 U. S. 441, 453–454 (1973) [First mention of pass-through vs C corporations which are taxes at the corporate level.]
• Rather, our cases allow Congress to disregard the corporate form to determine whether the shareholder received income in substance, if not in form.
• II A
• Our precedent suggests that Congress’s power to attribute a corporation’s income to its shareholders for tax purposes is limited. Eisner v. Macomber ... retained earnings caused an imbalance in the corporation’s capital account. ... declared a stock dividend that issued new shares to existing shareholders ... which left the shareholders in the same financial position as before the transaction.
• The Court held that shareholder Myrtle Macomber did not realize income from the stock dividend because she “received nothing out of the company’s assets for [her] separate use and benefit.”
• Importantly for our purposes, the Court also rejected the Government’s theory that Congress could attribute the corporation’s income to its shareholders. See id., at 213.
• Burk-Waggoner [Oil Assn. v. Hopkins] thus held that for tax purposes, Congress could treat a partnership like a corporation when it acts like a corporation. We did not decide whether Congress may treat a corporation like a partnership—e.g., attributing its income to shareholders—when, in truth and substance, it operates as a corporation.
• To my knowledge, Congress has not returned to that approach for domestic or widely held corporations of the kind Macomber considered. And while Congress continues to attribute income of certain closely held foreign corporations to their U. S. shareholders today, see 26 U. S. C. §951 et seq. (“subpart F”), doing so might be consistent with Macomber’s recognition that Congress can disregard the corporate form when, in substance, it is reasonable to treat the income of the corporation as that of the shareholders.
• II B
• The Court affirms Congress’s power to tax shareholders on “the undistributed income of American-controlled foreign corporations,” but it says that the Due Process Clause cabins that power by requiring income attributions not to be “arbitrary.”
• Just because Congress can attribute income of a closely held foreign corporation like KisanKraft to its shareholders does not mean it has equal power to attribute the income of a publicly traded domestic corporation to anyone holding a few shares in her retirement account. [not mention of pass-through entity vs C corp.]
• II C
• Congress’s power to attribute the income of closely held corporations to their shareholders is a difficult question—and unfortunately, the parties barely addressed it. Without focused briefing on the attribution question, I would not resolve it.
• Subpart F and the MRT may or may not be constitutional, nonarbitrary attributions of closely held foreign corporations’ income to their shareholders. And I agree with the Court that subpart F is not meaningfully different from the MRT in how it attributes corporate income to shareholders.
• In this litigation, however, the Moores have conceded that subpart F is constitutional. [moved from Barrett's location]
• Given the Moores’ concession, they have not met that burden here [to show they are entitled to a refund.] . For that reason, I concur in the Court’s judgment affirming the judgment below.

Thomas Dissent (Gorsuch)

• The Moores are correct. Sixteenth Amendment “incomes” include only income realized by the taxpayer.
• In Eisner v. Macomber, 252 U. S. 189 (1920), the Court explained that “the characteristic and distinguishing attribute of income,” as the term is used in the Sixteenth Amendment, is that it is “received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal.” Id., at 207.
• Because the Moores never actually received any of their investment gains, those unrealized gains could not be taxed as “income” under the Sixteenth Amendment.
• Today, the Court upholds the MRT only by ignoring the question presented. It does “not address the Government’s argument that a gain need not be realized to constitute income under the Constitution.”
• The Ninth Circuit erred by concluding that realization is not a constitutional requirement for income taxes. And, the majority’s “attribution” doctrine is an unsupported invention.
• I
• “Income” in the Sixteenth Amendment refers only to income realized by the taxpayer. The Amendment resolved a long-running conflict over the scope of the Federal Government’s taxing power. It paved the way for a federal income tax by creating a new constitutional distinction between “income” and the “source” from which that income is “derived.”
• Drawing that distinction necessitates a realization requirement.
• A [Thomas' review of taxation]
• A 1
• While direct taxes must be apportioned, the Sixteenth Amendment allows Congress to tax incomes “without apportionment.”
• A 2
• [review of federal/national revenue and taxation through the summer of 1787]
• A 3
• [extends the review up to, but not including Pollack.]
• A 4
• In Pollock [v. Farmers’ Loan & Trust Co., 158 U. S. 60], the Court concluded, for the first time, that a tax was direct, not apportioned, and therefore unconstitutional. The Court’s reasoning turned on the premise that the Constitution permits no distinction between taxing income and taxing the source from which that income is derived.
• Because the Sixteenth Amendment overruled the result in Pollock, an accurate understanding of the case is essential to understanding the Amendment.
• Congress imposed the Nation’s first peacetime income tax as part of the Revenue Act of 1894.
• In Pollock v. Farmers’ Loan & Trust Co., 157 U. S. 429 (1895), the Court considered whether the 1894 income tax was a direct tax that failed to satisfy the Direct Tax Clause’s apportionment requirement.
• The Court concluded that ["under the state system of taxation,] “all taxes on real estate or personal property or the rents or income thereof were regarded as direct taxes” at the time the Constitution was ratified. [add qualifier that Thomas omits from quoting Pollack]
• In the end, the Court concluded that income could not be distinguished from the source from which it was derived for purposes of determining whether a tax on that income would be direct or indirect.
• After rehearing, the Court extended its logic and held that a tax on income derived from personal property—like a tax on income derived from real property—was a direct tax. 158 U. S., at 625.
• A 5
• The Sixteenth Amendment was designed to overrule Pollock's obstacle to an income tax, and it was understood by the public in those terms.
• The Amendment was passed by Congress on July 12, 1909. See 44 Cong. Rec. 4440. And, the Secretary of State certified that the Amendment had been ratified by the States on February 25, 1913. 37 Stat. 1785.
• B
• First, because the Amendment abolished Pollock’s rule that an income tax must be classified as direct or indirect based on whether a tax on the source of that income would be direct or indirect, the Amendment created a constitutional distinction between income and its source.
• Second, because Sixteenth Amendment “income” must be distinguished from its source, the Amendment includes a realization requirement.
• B 1
• The only thing the Amendment changed about the Constitution was to abolish Pollock’s rule that an income tax is a direct tax if a tax on the source of the income would be a direct tax.
• B 2
• Because the Sixteenth Amendment requires a way to distinguish between income and source, it includes a realization requirement.
• [references to dictionaries]
• The Government argues that the decision to omit the often-used word “realized” from the Sixteenth Amendment is significant evidence that the Amendment does not require realization. See Brief for United States 16.
• But, the choice to instead use the near-synonym “derived” merely reflects the repeated use of the word “derive” to describe the relationship of income to its source in Pollock, to which the Sixteenth Amendment was a direct response.
• We granted certiorari in this case to answer whether Congress may “tax unrealized sums without apportionment among the states.” [Not the question stated in the majority opinion. See "Issue(s) Before the Court" above.]
• II
• The majority starts by surveying a scattered sampling of precedents—mostly about tax avoidance—to invent an “attribution” doctrine that sustains the MRT.
• II A [Thomas describes his view of the majority opinion starting on page 26 of a 33 page dissent.]
• The majority’s Sixteenth Amendment “attribution” doctrine is a new invention. The majority justifies its creation by plucking superficially supportive phrases from an eclectic selection of tax cases.
• They do not suggest that Congress may freely choose whether to impose an income tax on a corporation or on its shareholders. [corporations are a creation of Congressional law. Congress is free to determine how Congress will tax the income realized by Congress' legal entity.]
• II B [page 30 of 33, we might get to some reasoning]
• ... the majority’s insistence that the MRT is just like other forms of pass-through taxation is not convincing.
• First, the MRT’s taxation of corporate shareholders is not like pass-through taxation of partners. [why? Thomas does not say.]
• Second, and for similar reasons, the MRT’s taxation of corporate shareholders is not like pass-through taxation of shareholders of “S corporations.” ... it does not make sense to look to S corporations for conclusions about the pass-through taxation of corporate shareholders generally. [who is? the case looks to S corporations to decide KisanKraft.]
• Finally, the MRT is unlike other taxes on shareholders of closely held foreign corporations. In fact, the MRT “tags a shareholder with taxable ‘income’ even if ” he purchased shares “long after the corporation earned the sums being taxed,” and it imposes no liability on taxpayers who owned shares for years of retained earnings but sold them before the MRT’s trigger date. [Is the trigger date of attribution (how is that done) as opposed to when the corporation realizes the income?]
• But, unlike the rest of subpart F, the MRT has no connection at all to any “recognition event” or “constructive receipt of income,” and it offers no “rational basis for Congress to attribute income to a taxpayer.” S. McElroy, The Mandatory Repatriation Tax Is Unconstitutional, 36 Yale J. Reg. Bull. 69, 80–81 (2018).
• The MRT turns solely on the ownership of stock on a certain date. That is a significant difference between the MRT and the rest of subpart F, and one with constitutional implications.
• Because the MRT is imposed merely based on ownership of shares in a corporation, it does not operate as a tax on income.
• III
• The Court today upholds the MRT, but not because it endorses the Ninth Circuit’s erroneous view that “realization of income is not a constitutional requirement.” 36 F. 4th, at 936.
• The majority acknowledges that the Sixteenth Amendment draws a distinction between income and its source. Ante, at 7.
• And, it does not dispute that realization is what distinguishes income from property. Ante, at 8. [III in majority opinion "income realized by the corporation"]
• Those premises are sufficient to establish that realization is a constitutional requirement. Sixteenth Amendment “income” is only realized income.

Full Recounting of Facts

• Since 1962, Congress has likewise treated American-controlled foreign corporations as pass-throughs.
• In 2017, Congress enacted a new law that attributes more income, including active business income, of American-controlled foreign corporations to their American shareholders and then taxes those shareholders on that income. [Mandatory Repatriation Tax or MRT]
• I A
• [pass-through basis] Instead of the entity itself paying taxes, income is attributed to the entity’s owners, such as shareholders or partners, who then pay taxes on the income of the entity even if the entity has not distributed any money or property to them.
• For decades before the 2017 [Tax Cuts and Jobs] Act, American-controlled foreign corporations had earned and accumulated trillions of dollars in income abroad that went almost entirely untaxed by the United States.
• ... the 2017 Act imposed a one-time, backward-looking tax on that accumulated income. That backward-looking tax is known as the Mandatory Repatriation Tax or MRT.
• ... a rate from 8 to 15.5 percent.
• I B
• In 2006, Charles and Kathleen Moore invested $40,000 in an American-controlled foreign corporation ....
• By the end of the 2017 tax year, the Moores’ pro rata share of KisanKraft’s accumulated income from 2006 to 2017 totaled about $508,000.
• They owed $14,729 in taxes on that income.
• The Moores paid that amount, then sued for a refund.
• A list of the material facts is available above

Majority Full Argument

• See Material Facts
• See Procedural History
• II
• Generally speaking, direct taxes are those taxes imposed on persons or property. See National Federation of Independent Business v. Sebelius, 567 U. S. 519, 570–571 (2012).
• As a practical matter, however, Congress has rarely enacted direct taxes because the Constitution requires that direct taxes be apportioned among the States. U. S. Const., Art. I, §9, cl. 4; see also §2, cl. 3.
• In other words, direct taxes must be apportioned among the States according to each State’s population.
• Indeed, the parties have cited no apportioned direct taxes in the current Internal Revenue Code, and it appears that Congress has not enacted an apportioned tax since the Civil War.
• By contrast, indirect taxes are the familiar federal taxes imposed on activities or transactions. That category of taxes includes duties, imposts, and excise taxes, as well as income taxes. U. S. Const., Art. I, §8, cl. 1; Amdt. 16
• In 1895, however, in Pollock v. Farmers’ Loan & Trust Co., this Court held that a tax on income from property equated to a tax on the property itself, and thus was a direct tax that had to be apportioned among the States. 158 U. S. 601, 627–628.
• Congress and the States responded to Pollock by approving a new constitutional amendment. Ratified in 1913, the Sixteenth Amendment rejected Pollock’s conflation of (i) income from property and (ii) the property itself.
• III
• What distinguishes income from property? The Moores argue that income requires realization. The Moores say that realization occurs when gains come into the taxpayer’s coffers—for example, through wages, sales, or dividends, as distinct from appreciation in the value of a home, stock investment, or other property.
• Critically, however, the MRT does tax realized income—namely, income realized by the corporation, KisanKraft. The MRT attributes the income of the corporation to the shareholders, and then taxes the shareholders (including the Moores) on their share of that undistributed corporate income.
• So the precise and narrow question that the Court addresses today is whether Congress may attribute an entity’s realized and undistributed income to the entity’s shareholders or partners, and then tax the shareholders or partners on their portions of that income.
• III A
• Next, in 1938 in Heiner v. Mellon, the Court again addressed a situation closely akin to the Moores’ case here—a tax on partners for the undistributed income of their partnership. 304 U. S. 271.
• The Court reaffirmed that Congress may choose to tax either the partnership or the partners on the partnership’s undistributed income.
• So by 1938, this Court’s precedents had established a clear rule that directly contradicts the Moores’ argument in this case. That line of precedent remains good law to this day.
• In response to that dispositive line of precedents against them, the Moores invoke the Court’s earlier 1920 decision in Eisner v. Macomber, 252 U. S. 189.
• Rather, the Court in Eisner v. Macomber addressed a situation where a corporation created and distributed additional stock to existing shareholders. 252 U. S., at 200. The corporation distributed the additional shares of stock in proportion to each shareholder’s percentage of ownership. Id., at 210–211. [Equivalent to a stock split?]
• The question in Eisner v. Macomber was whether the new stock was nonetheless taxable income for the shareholders. Id., at 199. The Court said no. Id., at 212.
• But the Moores interpret that language in Eisner v. Macomber to mean that a tax attributing an entity’s undistributed income to its shareholders or partners is not an income tax. The Moores’ reading is implausible.
• The Court in Eisner v. Macomber did not purport to address attribution, no doubt because the tax at issue there did not attribute income of the corporation to the shareholders.
• To sum up: he Court’s longstanding precedents plainly establish that, when dealing with an entity’s undistributed income, Congress may tax either (i) the entity or (ii) its shareholders or partners.
• III B
• Ever since that 1913 law ... basic partnership-tax rule has been settled: It “is axiomatic that each partner must pay taxes on his distributive share of the partnership’s income without regard to whether that amount is actually distributed to him.” United States v. Basye, 410 U. S. 441, 453 (1973).
• IV
• To be specific: The Moores explicitly concede that partnership taxes, S-corporation taxes, and subpart F taxes are income taxes that are constitutional and need not be apportioned.
• Instead, the Moores seek to differentiate the MRT from all of those other taxes long imposed by Congress and long upheld by this Court.
• According to the Moores:
  • (1) taxes on partnerships are distinguishable from the MRT and not controlled by precedent because partnerships are not separate entities from their partners;
  • (2) taxes on S corporations are distinguishable from the MRT and not controlled by precedent because shareholders of S corporations choose to be taxed directly on corporate income; and
  • (3) subpart F taxes on American shareholders’ portions of undistributed foreign corporate income are distinguishable from the MRT and not controlled by precedent because those taxes apply what the Moores call “constructive realization.”
• In any event, the Moores’ attempted distinctions of the various taxes fail on their own terms.
• First, the Moores contend that partners can be taxed on a partnership’s income only because, as of the time that the Sixteenth Amendment was ratified in 1913, partnerships were not seen as legal entities separate from the partners. But that assertion is incorrect.
• Second, the Moores seek to distinguish the taxation of S corporations by saying that shareholders’ choice to become an S corporation necessarily means that the S corporation’s income is truly the shareholders’ income. In short, the Moores’ consent theory does not explain Congress’s authority to tax the shareholders of S corporations directly on corporate income.
• Third, the Moores try to distinguish Congress’s long history of taxing shareholders of closely held foreign corporations—including through subpart F—on the ground that those laws apply “the doctrine of constructive realization.”
• ... the Moores’ constructive-realization theory does not distinguish the MRT from subpart F and other pass-through taxes. If subpart F is not unconstitutional under the “constructive realization” theory—and the Moores explicitly concede that it is not, Tr. of Oral Arg. 9—then the MRT is likewise not unconstitutional on that theory.
• The upshot is that the Moores’ argument, taken to its logical conclusion, could render vast swaths of the Internal Revenue Code unconstitutional. See, e.g., 26 U. S. C. §305(c) (deemed stock distributions); §§446, 448 (accrual accounting); §701 (partnership taxation); §§951–965 (subpart F); §951A (pass-through tax on global intangible low-taxed income); §1256(a) (certain futures contracts); §1272(a) (original-issue discount instruments); §§1361–1379 (S corporations); §§2501–2524 (gift taxes).
• The Constitution does not require that fiscal calamity.
• * * *
• For their part, the dissent and the opinion concurring in the judgment focus primarily on the realization issue—namely, whether realization is required for an income tax. We do not decide that question today.
• That said, we emphasize that our holding today is narrow. It is limited to:
  • (i) taxation of the shareholders of an entity,
  • (ii) on the undistributed income realized by the entity,
  • (iii) which has been attributed to the shareholders,
  • (iv) when the entity itself has not been taxed on that income. [pass-through entity]
• In other words, our holding applies when Congress treats the entity as a pass-through.
• The Moores argue that realization is a constitutional requirement; the Government argues that it is not. To decide this case, we need not resolve that disagreement over realization.
• The core of the rationale is available above