The Scariest SCOTUS Case This Term

The American Spectator ^

[Tench_Coxe]

Tuesday morning the U.S. Supreme Court will hear oral arguments pursuant to a case in which Charles and Kathleen Moore argue that an obscure provision of the 2017 Tax Cuts and Jobs Act is unconstitutional. This is not an “inside baseball” case that only compulsive Court watchers will care about. If the justices rule against the Moores, it will supercharge the government’s confiscatory powers by enabling its inclination to tax unrealized income. This will affect everyone reading this column, not just investors with large stock portfolios. It would, in theory, permit the IRS to tax an increase in the value of your home as a capital gain — whether you have sold it or not.

[goo goo g'joob]

This reminds me of back in the dotcom heyday...

exercising stock options would trigger a tax due on the difference in option award price and option exercise price - even with out a stock sale

many folks lost it all under the following (common) scenario:

stock option award $1, stock option exercise $40 (tax on $39 due) - then come next April in time to pay the tax the stock is now $2 - bankruptcy

I think this has been fixed to some degree (not in that game anymore)

[Leaning Right]

> It also sounds like it is not public and is controlled stock. <

Good point. It might not be common stock but some sort of partnership.

As you noted, more information is needed. I was listening to Fox News earlier today, and they reported only the barest details about this story. Just enough to make me upset.

[glorgau]

I can see it now. When a stock goes up 10% in a day you’ll have to pay estimated taxes on the unrealized gain.

[Honest Nigerian]

I think in England the tax laws allow the taxpayer to inflation adjust when reporting capital gains. Is that true?
Do they inflation adjust like that in Ireland?

[alancarp]

"It would, in theory, permit the IRS to tax an increase in the value of your home as a capital gain — whether you have sold it or not."

"The author undermines his argument by presenting an outlandish scenario."

Maybe not that farfetched. Haven't we all seen our local city/county taxing boards assess property taxes on the basis of what _they_believe_ the value of your house is? You may do absolutely nothing to improve the value of the property and still see a tax increase at the whim of someone deciding to make a reassessment. This isn't fundamentally different from that.

[voicereason]

If there is a ruling, it will be narrow and not effect your house unrealized gains or unrealized stock capital gains imho.

Sure....because no government agency has ever attempted to expand their authority, or operate beyond what they are allowed to do.

A major problem with any type of assumption on unrealized gains, is that it simply can't be accounted for accurately. Real estate for example is considered fairly stable to increasing in value; yet we are actually seeing decreases in home prices in some areas.

Other investment areas are probably even more difficult to predict, take crypto for example. Looking at Bitcoin which is a standard has had a hell of a roller-coaster ride.

So if they are going to try and capture unrealized gains, how do they plan to account for unrealized losses? Although I'm willing to bet that in this scheme, there are no unrealized losses allowed. Especially since the money the government collects would be spent as quickly as they get their grubby hands on it.

[zeugma]

Oral arguments will be posted here this afternoon.

https://www.supremecourt.gov/oral_arguments/argument_transcript/2023

I suspect most of the questioning will be procedural. Even Thomas will be squeamish about uncovering some of the darker side of the IRS

[desertsolitaire]

I believe these “unrealized” profits or income streams used to be call imputed income. That is, it’s not the Govt’s fault you don’t rent out tour vacation cabin or deer cabin all the other weeks you don’t use it yourself and THRT TAX UIU ON WHAT THET ESTIMATE YOU MIGHT HAVE MADE IF YOU WEREN’T SO LAZY OR SELFISH AS TO KEEP IT FOR YOURSELF. I can’t imagine this being American and flying from SCOTUS but who knows?

[Garden Island]

“So, the question I have is, was this something the Democrats stuck into the tax act of 2017, or was it a GOPe RINOs”

Oh it was a GOP RINO for sure. And yes, you can call him Uni-party too. You can call him a grill cheese sandwich for all I care. I call him Donald Trump, because it is too big of a detail to recklessly overlook, especially if his name is on the bill and he touted it as a great tax plan and his supporters gleefully supported it too.

It might be a good idea to question your judgement if you are trusting Trump to be extremely detail oriented in the future and to impulsively blame others for Trump putting his name on a supposed tax cut that in your own words goal is to screw the middle class.

[Wuli]

So in the 2017 tax cut legislation the idiots in the GOP got the tax cuts they wanted and for a little Dim support they got a trojan horse in what constitutes income. It’s a testament to the perrenial unobservant GOP members of Congress, who like their Dim opposents rarely read any bill in its entirety, nor demand their staffs do that in an effort to look out for the bad trojan horses in it.

[Jumper]

You are correct. I just cane back to correct myself. Of course I realized that is why I paid the taxes. I paid them on my Ethereum mining, BTC and other crypto currency.

This whole case is not the company bring a building or your residence, it is about a vested interest in an investment of 13% of a company. If they are forced to look at the fili g document
of incorporation or LLC they will sell there percentage represented as stock in the company (a share is 13% or in 13% holding of stocks).

They are dealing with a small business or they are the small business partners who do not understand the filing document.

Their is with state taxes on the surface, and the Secretary of State could clear it up, or an accountant, but not their stupid attorney thus they persist in refusing to pay their taxes.

Once you have a business in your state, they require at a minimum minimum you file a tax return whether the Corp or LLC makes anything or not.

Their whole case was poorly handed off from the Secretary of State to the State Department of Taxiation.

[Jumper]

My phone is small and I need to stick to the computer and keyboard for FR.

[Political Junkie Too]

Any tax on unrealized gains that requires one to sell the underlying asset in order to pay the tax is confiscatory and a violation of the 5th amendment takings clause.

If a tax on the unrealized appreciation of a family's home forces the family to sell the home in order to pay the tax on it, it is an illegal taking for public use (the taxes) without compensation.

-PJ

[Robert DeLong]

Oh, you can blame Trump, you Never-Trumper. But for an administration that was under attack from the day it won the election before it even assumed office. It was the 1st win, despite the Republicans being given full control. They were the biggest obstacle to change, because the GOPe had lied to the base for years about what they would do if we gave them control.

Trump is not a GOPe stooge, but that DeSantis clown that you support is most assuredly that which you claim Trump is. What an ignorant statement by you, who obviously has little grasp upon reality, and thus nothing but a baloney sandwich.

If Trump is guilty of anything, it is that he naively trusts the Republicans as being stalwarts for America. Nothing could be further from the truth. A second term by Trump will be decisively different than the first, because the eyes of many of the Republican base has awakened to the fact that the GOPe is nothing more than the Democrat infiltrators. Then again, DJT may have known all along but he had to show the base, those who possessed intelligence, what the GOPe really thinks of their base. Unfortunately, ignorant Republican base members like yourself never learned that the GOPe hates DJT because he is coming for them too. Not surprising that you remain the fool, because Donald Trump wasn't responsible for putting this language in, and since he was surrounded by traitors within his administration whose allegiance stood with the Deep State, not with the nation they too failed him.

Of course the ignorant amongst us are that or they are complicit with those who have chosen to sell this nation down the river for their own personal gain. So, what is your excuse, stupidity or complicity?

[Sequoyah101]

It has already happened for ages. In 2021 many of us paid large to huge amounts of tax on cap gains that year. Many no longer had those gains in 2022 when the taxes were paid. I am still suffering huge IRMA charges on those gains I no longer have. Uncle sugar takes taxes on cap gains the year they are realized and niggardly doles out deductions for losses until they are exhausted or expire.

There is nothing fair about he tax code, not even logical. The tax code exists to favor friends and punish enemies.

[Faith65]

Following...

[kiryandil]

“I see that you have some money there. Give it to me.”

[Political Junkie Too]

I believe these “unrealized” profits or income streams used to be call imputed income. That is, it’s not the Govt’s fault you don’t rent out tour vacation cabin...

It was actually more insidious than that.

Several decades ago, Democrats floated the idea of an imputed income tax for homeowners. They wanted the homeowner to pay an imputed tax on the income the owner would have received if they rented the home to themselves.

In other words, all homes would be treated as rental properties, all owners would be landlords, and all families living in their own homes would actually be renting to themselves, thereby creating a rental income that could be taxed.

-PJ

[scrabblehack]

Isn’t that how gambling (lottery, race track, etc.) works?

[Shady]

They won’t even ask, it just won’t be there anymore.