Insights

The IRS Goes Global – Moore v US

July 15, 2024

Just when you thought the IRS’ reach could not get any longer, the Supreme Court recently gave them a stronger reach internationally.  In Moore v US, the Moore’s invested money in a foreign entity in exchange for equity.  They claimed to not be involved with the business, but records show that Mr. Moore was in fact a Director for four years.  The foreign entity made money every year and instead of distributing the proceeds to the owners, it reinvested the funds back into the business. 

Under the Mandatory Repatriation Tax, which was enacted under the Tax Cuts and Jobs Act of 2017, the undistributed profits were subject to tax in the US.  The Moore’s challenged the constitutionality of this tax arguing they never realized the income.  The Court held that because foreign corporations are treated as pass-through entities, this tax was a constitutional tax on realized income. 

Moving forward, this ruling will very likely impact discussions and challenges to any wealth tax or further updates to the tax code related to business owners, regardless if the holding is domestic or international.  I guess when people say we are going global, they must be including the IRS. 

Next week, we will take on the overturning of the Chevron decision
 
Other items of interest:

As always, please don’t hesitate to email myself (jsanders@mpl-law.com), Andy Miller (amiller@mpl-law.com), Christian Miller (cmiller@mpl-law.com), Erik Spurlin (espurlin@mpl-law.com), Brad Leber (bleber@mpl-law.com) or anyone in our office with questions or comments.  

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