Charles G. Moore ; Kathleen F. Moore v. United States of America

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CHARLES G. M OORE ; KATHLEEN F.
M OORE ,
Plaintiffs-Appellants,
v.
UNITED STATES OF AMERICA,
Defendant-Appellee.
No. 20-36122
D.C. No.
2:19-cv-01539-
JCC
OPINION
Appeal from the United States District Court
for the Western District of Washington
John C. Coughenour, District Judge, Presiding
Argued and Submitted January 14, 2022
San Francisco, California
Filed June 7, 2022
Before: Ronald M. Gould, Jacqueline H. Nguyen, and
Mark J. Bennett, Circuit Judges.
Opinion by Judge Gould

-- 1 of 17 --

2 M OORE V . U NITED STATES
SUMMARY*
Tax
The panel affirmed the district court’s dismissal of an
action seeking to invalidate the Mandatory Repatriation Tax.
Taxpayers invested in a controlled foreign corporation
(CFC), which is a foreign corporation whose ownership or
voting rights are more than 50% owned by U.S. persons.
Traditionally, U.S. taxpayers generally did not pay U.S.
taxes on foreign earnings until those earnings were
distributed to them. However, when particular categories of
undistributed earnings were repatriated to the U.S.—through
a distribution or loan to U.S. shareholders, or an investment
in U.S. property— U.S. shareholders who owned at least
10% of a CFC could be taxed on a proportionate share of
those earnings. The primary method used to tax a CFC’s
U.S. shareholders on foreign earnings held offshore was a
provision of the tax code called Subpart F.
In 2017, the Tax Cuts and Jobs Act (TCJA) created a
new, one-time tax: the Mandatory Repatriation Tax (MRT).
Under the MRT’s modified version of Subpart F, U.S.
persons owning at least 10% of a CFC are taxed on the
CFC’s profits after 1986, regardless of whether the CFC
distributed earnings. Additionally, going forward, a CFC’s
income taxable under subpart F includes current earnings
from its business.
* This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.

-- 2 of 17 --

M OORE V . U NITED STATES 3
Taxpayers challenged the constitutionality of
Subpart F’s ability to permit taxation of a CFC’s income
after 1986 through the MRT. The district court dismissed the
action for failure to state a claim, denied taxpayers’ cross-
motion for summary judgment, and taxpayers appealed.
The panel first held that, given the background of the
government’s power to lay and collect taxes, the MRT is
consistent with the Apportionment Clause. That clause
requires that a direct tax must be apportioned so that each
state pays in proportion to its population. The panel
acknowledged that the Sixteenth Amendment exempts from
the apportionment requirement the category of “incomes,
from whatever source derived.” The panel observed that
courts have consistently upheld the constitutionality of taxes
similar to the MRT notwithstanding any difficulty in
defining income, that the realization of income does not
determine the tax’s constitutionality, and that there is no
constitutional ban on Congress disregarding the corporate
form to facilitate taxation of shareholders’ income. The
panel explained that Subpart F only applies to U.S. persons
owning at least 10% of a CFC, the MRT builds upon a
preexisting liability attributing a CFC’s income to its
shareholders, and taxpayers were, and continue to be, treated
as individuals who have some ability to control distribution.
The panel also held that, assuming without deciding that
the MRT is retroactive, the MRT does not violate the Fifth
Amendment’s Due Process Clause. The panel explained that
the MRT serves the legitimate purpose of preventing CFC
shareholders who have not yet received distributions from
obtaining a windfall by never having to pay taxes on their
offshore earnings that have not yet been distributed. The
MRT accomplished this legitimate purpose by rational
means: by accelerating the effective repatriation date of

-- 3 of 17 --

4 M OORE V . U NITED STATES
undistributed CFC earnings to a date following passage of
the TCJA.
COUNSEL
Andrew M. Grossman (argued), David B. Rivkin, Jr., Jeffrey
H. Paravano, and Sean Sandoloski, Baker Hostetler,
Washington, D.C.; Sam Kazman and Devin Watkins,
Competitive Enterprise Institute, Washington, D.C.; for
Plaintiffs-Appellants.
Nathaniel S. Pollock (argued), Francesca Ugolini, and
Michael J. Haungs, Attorneys, Tax Division; David A.
Hubbert, Acting Assistant Attorney General; Tessa Gorman,
Acting United States Attorney; United States Department of
Justice, Washington, D.C.; for Defendant-Appellee.
OPINION
GOULD, Circuit Judge:
Charles and Kathleen Moore (the “Moores”) seek to
invalidate the Mandatory Repatriation Tax (“MRT”) on the
grounds that it violates the Constitution’s Apportionment
Clause and Fifth Amendment’s Due Process Clause. The
Moores, however, have staked out a position for which we
can find no persuasive authority. We affirm the district
court’s dismissal of the Moores’ action.
FACTS AND PROCEDURAL HISTORY
In 2005, the Moores invested in KisanKraft, a company
owned by their friend which supplies modern tools to small

-- 4 of 17 --

M OORE V . U NITED STATES 5
farmers in India. The Moores invested $40,000 in return for
11% of the common shares. KisanKraft is a controlled
foreign corporation (“CFC”), which means that it is a foreign
corporation whose ownership or voting rights are more than
50% owned by U.S. persons.
KisanKraft is located in India, and the Moores have
never participated in its day-to-day operations or
management. While KisanKraft has turned a profit every
year, KisanKraft has never distributed any earnings to its
shareholders. Instead, KisanKraft has reinvested all of its
earnings as additional shareholder investments in its
business.
Traditionally, U.S. taxpayers generally did not pay U.S.
taxes on foreign earnings until those earnings were
distributed to them. This system created a strong incentive
for CFCs to separately incorporate their foreign operations,
allowing U.S. taxpayers to pay taxes only if and when
earnings were repatriated to the U.S. By 2015, CFCs had
accumulated an estimated $2.6 trillion in earnings offshore
that were not presently subject to U.S. taxation.
Before 2017, the primary method used to tax a CFC’s
U.S. shareholders on foreign earnings held offshore was a
provision of the tax code called Subpart F. See 26 U.S.C.
§ 951 (2007). Subpart F permitted the taxation of certain
types of a U.S. person’s CFC earnings when that U.S. person
owned at least 10% of a CFC’s voting stock. Id.
Specifically, U.S. shareholders who owned at least 10% of a
CFC could be taxed on a proportionate share of particular
categories of its undistributed earnings such as dividends,
interest, and earnings invested in certain U.S. property. Id.
§ 951(a). Neither Subpart F nor any other provision of the
tax code permitted the U.S. Government to tax U.S.
shareholders on the CFC’s active business income

-- 5 of 17 --

6 M OORE V . U NITED STATES
attributable to the CFC’s own business held offshore, such
as when a CFC manufactures and sells products to a third
party in a foreign country. Such income was only taxable if
and when repatriated to the U.S. through a distribution to
U.S. shareholders, loan to U.S. shareholders, or an
investment in U.S. property.
In 2017, Congress passed, and President Trump signed
into law, the Tax Cuts and Jobs Act (“TCJA”). See 131 Stat.
2054 (2017). The TCJA transformed U.S. corporate taxation
from a worldwide system, where corporations were
generally taxed regardless of where their profits were
derived, toward a territorial system, where corporations are
generally taxed only on their domestic source profits. As
part of this change, the TCJA created a new, one-time tax:
the MRT. The MRT modified Subpart F by classifying CFC
earnings after 1986 as income taxable in 2017. See
26 U.S.C. §§ 965(a), (d) (2017). Under this revised version
of Subpart F, U.S. persons owning at least 10% of a CFC are
taxed on the CFC’s profits after 1986 at either 15.5% for
earnings held in cash or 8% otherwise. Id. § 965(c). The
MRT imposes this tax regardless of whether the CFC
distributed earnings. It also modified CFC taxes going
forward: effective January 1, 2018, a CFC’s income taxable
under Subpart F includes current earnings from its business.
The TCJA also included tax benefits for shareholders of
CFCs. When CFCs repatriate untaxed earnings as dividends
to U.S. shareholders subject to the MRT, those earnings are
generally not taxed. See 26 U.S.C. § 245A(a). Further, the
TCJA effectively eliminated any other taxes on a CFC’s
undistributed earnings and profits before 2018.
The Government estimates that the MRT will generate
$340 billion in tax revenue.

-- 6 of 17 --

M OORE V . U NITED STATES 7
In 2018, the Moores learned about the MRT. According
to their CPA’s calculations, their tax liability for 2017
increased by roughly $15,000 because of the MRT. This tax
liability was based on their pro rata share of KisanKraft’s
retained earnings of $508,000, subjecting them to an
additional $132,512 in taxable income.
The Moores challenged the constitutionality of Subpart
F’s ability to permit the taxation of a CFC’s income after
1986 through the MRT. The district court granted the
Government’s motion to dismiss for failure to state a claim
and denied the Moores’ cross-motion for summary
judgment. It held that the MRT taxed income and, although
it was retroactive, did not violate the Fifth Amendment’s
Due Process Clause.
After the district court’s dismissal, the Moores timely
appealed. We affirm the district court’s order.
STANDARD OF REVIEW
We review de novo both the constitutionality of a statute
and a motion to dismiss for failure to state a claim. United
States v. Mohamud, 843 F.3d 420, 432 (9th Cir. 2016)
(constitutionality of statute); Dougherty v. City of Covina,
654 F.3d 892, 897 (9th Cir. 2011) (motion to dismiss for
failure to state a claim).
DISCUSSION
The Moores raise two constitutional challenges to the
MRT: (1) they contend that it violates the Apportionment
Clause, and (2) they contend that it violates the Fifth
Amendment’s Due Process Clause.

-- 7 of 17 --

8 M OORE V . U NITED STATES
Because the MRT imposed on CFCs is a novel concept,
it is worth dwelling for a moment on some general principles
that guide us. The federal government is, of course, a
government of limited and specified powers. See, e.g., Nat’l
Fed’n of Indep. Bus. v. Sebelius (“NFIB”), 567 U.S. 519,
533–534 (2012). One of those enumerated powers of
Congress is the power to “lay and collect Taxes, Duties,
Imposts and Excises, to pay the Debts and provide for the
common Defence and general Welfare of the United States.”
U.S. CONST . art. I, § 8, cl. 1. Congress’s power to tax was a
central force behind the Constitution. See Hylton v. United
States, 3 U.S. (3 Dall.) 171, 173 (1796) (“The great object of
the Constitution was, to give Congress a power to lay taxes,
adequate to the exigencies of government”). Further, it has
long been established that the federal government may adopt
laws that are necessary and proper to effectuate its legitimate
purposes. The Constitution gives Congress the power “[t]o
make all Laws which shall be necessary and proper for
carrying into Execution the foregoing Powers, and all other
Powers vested by this Constitution in the Government of the
United States, or in any Department or Officer thereof.”
U.S. C ONST . art. I, § 8, cl. 18; see also McCulloch v.
Maryland, 17 U.S. (4 Wheat.) 316, 323–25 (1819).
Once the federal government decides to tax something,
then, subject to any constitutional limitations, its power to
tax and flexibility as to how to accomplish that must
necessarily be broad. See, e.g., Agency for Int’l Dev. v. All.
for Open Soc’y Int’l, Inc., 570 U.S. 205, 213 (2013) (stating
that the Spending Clause “provides Congress broad
discretion to tax”); NFIB, 567 U.S. at 573 (“[T]he breadth of
Congress’s power to tax is greater than its power to regulate
commerce”). It is also clear that Congress has sought to
exercise the full scope of its constitutionally provided power
to tax. See Comm’r v. Glenshaw Glass Co., 348 U.S. 426,

-- 8 of 17 --

M OORE V . U NITED STATES 9
429 (1955) (noting that the definition of “gross income” to
be reported by taxpayers “was used by Congress to exert in
this field ‘the full measure of its taxing power.’” (quoting
Helvering v. Clifford, 309 U.S. 331, 334 (1940))). Given
Congress’s expansive intent in taxing gross income,
“exclusions from gross income are construed narrowly in
favor of taxation.” Comm’r v. Dunkin, 500 F.3d 1065, 1069
(9th Cir. 2007). It is against this background that we must
decide whether the MRT offends the U.S. Constitution’s
Apportionment Clause or its Due Process Clause.
I. The MRT does not violate the Apportionment Clause
The Constitution’s Apportionment Clause provides that
“No Capitation, or other direct, Tax shall be laid, unless in
Proportion to the Census or Enumeration herein before
directed to be taken.” U.S. C ONST . art. I, § 9, cl. 4. “This
requirement means that any ‘direct Tax’ must be apportioned
so that each State pays in proportion to its population.”
NFIB, 567 U.S. at 570. The Apportionment Clause
traditionally applied to only capitations1 and land taxes. See
id. at 571 (“[D]irect taxes, within the meaning of the
Constitution, are only capitation taxes, as expressed in that
instrument, and taxes on real estate.” (quoting Springer v.
United States, 102 U.S. 586, 602 (1881))). While the
Supreme Court in Pollock v. Farmers’ Loan & Tr. Co., held
that income from personal property was subject to the
Apportionment Clause, see 158 U.S. 601, 618 (1895), the
Sixteenth Amendment overruled this result, further
1 “Capitations are taxes paid by every person, without regard to
property, profession, or any other circumstance.” NFIB, 567 U.S. at 571
(simplified).

-- 9 of 17 --

10 M OORE V . U NITED STATES
reinforcing the narrow reach of the Apportionment Clause,
see NFIB, 567 U.S. at 571.
The Sixteenth Amendment, ratified in 1913, exempts
from the apportionment requirement the expansive category
of “incomes, from whatever source derived.” See U.S.
CONST . amend. XVI. In United States v. James, we noted
the difficulty of categorically defining everything that
constitutes income. See 333 F.2d 748, 753 (9th Cir. 1964)
(en banc) (“The courts have given a wide scope to the
income tax, but have realized that the borderline content of
‘income’ must be determined case by case. Essentially the
concept of income is a flexible one . . . .” (quoting Stanley
S. Surrey & William C. Warren, The Income Tax Project of
the American Law Institute: Gross Income, Deductions,
Accounting, Gains and Losses, Cancellation of
Indebtedness, 66 Harv. L. Rev. 761, 770–71 (1953))).
Despite the difficulty in defining income, courts have
held consistently that taxes similar to the MRT are
constitutional. In Eder v. Commissioner of Internal
Revenue, the Second Circuit held that the inclusion of
foreign corporate income under a statute predating Subpart
F was constitutional. See 138 F.2d 27, 28–29 (2d Cir. 1943).
Thirty years later, the United States Tax Court upheld pre-
MRT provisions of Subpart F against constitutional
challenges, and the decisions were affirmed by the Second
and Tenth Circuits. See Whitlock’s Est. v. Comm’r, 59 T.C.
490, 508 (1972), aff’d in part, rev’d in part, 494 F.2d 1297,
1298–99, 1301 (10th Cir. 1974) (upholding constitutionally
of Subpart F provision taxing “a corporation’s undistributed
current income to the corporation’s controlling
stockholders.”); Garlock Inc. v. Comm’r, 489 F.2d 197, 202
(2d Cir. 1973) (affirming Tax Court’s ruling that a CFC’s
Subpart F income was attributable to shareholders even if

-- 10 of 17 --

M OORE V . U NITED STATES 11
that income had not been distributed and stating that the
argument it is unconstitutional “borders on the frivolous in
the light of [the Second Circuit’s] decision in Eder”).
Whether the taxpayer has realized income does not
determine whether a tax is constitutional. In Heiner v.
Mellon, the Supreme Court stated that whether or not a
“partner’s proportionate share of the net income of the
partnership” was distributable was not material to whether it
could be taxed. 304 U.S. 271, 281 (1938). Similarly in Eder,
the Second Circuit noted that “[i]n a variety of circumstances
it has been held that the fact that the distribution of income
is prevented by operation of law, or by agreement among
private parties, is no bar to its taxability.” 138 F.2d at 28
(citing Heiner, 304 U.S. at 281; Helvering v. Enright’s Est.,
312 U.S. 636, 641 (1941)). And, the Supreme Court has
made clear that realization of income is not a constitutional
requirement. See Helvering v. Horst, 311 U.S. 112, 116
(1940) (“[T]he rule that income is not taxable until realized
. . . . [is] founded on administrative convenience . . . and [is]
not one of exemption from taxation where the enjoyment is
consummated by some event other than the taxpayer’s
personal receipt of money or property.”); see also Helvering
v. Griffiths, 318 U.S. 371, 393–94 (1943) (explaining that
Horst “undermined . . . the original theoretical bases” of a
constitutional realization requirement).
What constitutes a taxable gain is also broadly construed.
In Helvering v. Bruun, the Supreme Court determined that a
lessee’s improvements to the land were a taxable gain when
the lessor regained possession of the land. 309 U.S. 461, 469
(1940). The Court instructed that a taxable “[g]ain may
occur as a result of exchange of property, payment of the
taxpayer’s indebtedness, relief from liability, or profit
realized from the completion of a transaction.” Id. We

-- 11 of 17 --

12 M OORE V . U NITED STATES
applied this precedent nearly half a century later, holding
that the cancellation of indebtedness was a taxable gain. See
Vukasovich, Inc. v. Comm’r, 790 F.2d 1409, 1415 (9th Cir.
1986) (“We have no doubt that an increase in wealth from
the cancellation of indebtedness is taxable where the
taxpayer received something of value in exchange for the
indebtedness.”).
Further, there is no blanket constitutional ban on
Congress disregarding the corporate form to facilitate
taxation of shareholders’ income. In other words, there is no
constitutional prohibition against Congress attributing a
corporation’s income pro-rata to its shareholders. See, e.g.,
Dougherty v. Comm’r, 60 T.C. 917, 928 (1973) (noting that
nothing “prevent[s] Congress from bypassing the corporate
entity in determining the incidence of Federal income
taxation.”). And here, there is no dispute that KisanKraft
actually earned significant income, though all tax that the
Moores’ owed the U.S. Government on their pro-rata share
of KisanKraft was deferred until the MRT went into effect
in 2017.
Given this background, we hold that the revised Subpart
F is consistent with the Apportionment Clause. As modified
by the MRT, Subpart F only applies to U.S. persons owning
at least 10% of a CFC. The MRT builds upon these U.S.
persons’ preexisting tax liability attributing a CFC’s income
to its shareholders. Before the MRT, U.S. persons owning
at least 10% of a CFC were already subject to certain taxes
on the CFC’s income. Minority owners like the Moores
were, and after the passage of the MRT continue to be,
treated as individuals who have some ability to control
distribution. See id. (“In subpart F, Congress has singled out
a particular class of taxpayers . . . whose degree of control
over their foreign corporation allows them to treat the

-- 12 of 17 --

M OORE V . U NITED STATES 13
corporation’s undistributed earnings as they see fit.”).
Further, the MRT applies to taxable gains. Clearly,
KisanKraft earned significant income, and the MRT assigns
only a pro-rata share of that income to the Moores.
Relying on Eisner v. Macomber, 252 U.S. 189, 219
(1920), and Glenshaw Glass, 348 U.S. at 431, the Moores
argue that the MRT is an unapportioned direct tax.
Specifically, the Moores argue that Macomber and
Glenshaw Glass require income to be realized before it can
be taxed. They urge us to adopt and apply the purported
definition of income used in Glenshaw Glass, which would
require “[1] undeniable accessions to wealth, [2] clearly
realized, and [3] over which the taxpayers have complete
dominion.” 348 U.S. at 431. The Moores’ reliance on these
cases is misplaced: the Supreme Court, our court, and other
courts have narrowly interpreted Macomber and Glenshaw
Glass, and Glenshaw Glass’s definition is not applicable
here.
First, Macomber and Glenshaw Glass themselves
foreclose the Moores’ arguments. In Macomber, the Court
was clear that it was only providing a definition of what
“[i]ncome may be defined as,” 252 U.S. at 207, not a
universal definition. Glenshaw Glass reiterated the limited
scope of Macomber’s definition of income by emphasizing
that, while the definition “served a useful purpose . . . , it was
not meant to provide a touchstone to all future gross income
questions.” 348 U.S. at 431. Glenshaw Glass similarly
cabined the definition of income it used, prefacing its
definition of income by saying “[h]ere we have instances
of,” signaling that the Court was focused on the specific facts
before it. See id. The Court in Glenshaw Glass never stated
or suggested that the definition it used was a universal (or
even broadly applicable) test. Realization was also not even

-- 13 of 17 --

14 M OORE V . U NITED STATES
disputed in Glenshaw Glass, explaining why the Court did
not make more than a passing reference to realization. See
id. at 428–29 (discussing how both taxpayers had realized
damages and simply disputed their need to pay taxes on
them).
Second, the Supreme Court has subsequently made clear
that Macomber and Glenshaw Glass do not provide a
universal definition of income. In Horst, the Supreme Court
explained that the concept of realization is “founded on
administrative convenience” and does not mean that a
taxpayer can “escape taxation because he did not actually
receive the money.” 311 U.S. at 116. In Griffiths, the
Supreme Court explicitly stated that this holding from Horst
“undermined . . . the original theoretical bases of the
decision in Eisner v. Macomber.” 318 U.S. at 394. The
Supreme Court recently reiterated Horst’s statement that
“the concept of realization is founded on administrative
convenience,” Cottage Savings, 499 U.S. at 559 (quoting
Horst, 311 U.S. at 116), without adopting the test from
Glenshaw Glass that the Moores urge upon us; in fact, the
Court did not even cite to Glenshaw Glass.
Third, we have not adopted the definition of income the
Moores advocate. In James, we cited a passage from
Glenshaw Glass that included the definition of income the
Moores favor, but we never adopted it then or later. See
333 F.2d at 752 (noting also that “insofar as [Macomber]
purported to offer a comprehensive definition of the term
income as used in the Sixteenth Amendment, it has been
discarded.”). Instead, we stated that there was no set
definition of income under the Sixteenth Amendment. See
id. at 752–53. Similarly, in Comm’r v. Fender Sales, Inc.,
we did not cite to Glenshaw Glass or adopt the Moores’
preferred definition when determining whether a tax was

-- 14 of 17 --

M OORE V . U NITED STATES 15
constitutional under the Sixteenth Amendment. See
338 F.2d 924, 927 (9th Cir. 1964) (noting also that “[i]n this
context, Eisner v. Macomber . . . is not even apposite, let
alone controlling.”).
Finally, although it does not control our analysis, holding
that Subpart F is unconstitutional under the Apportionment
Clause would also call into question the constitutionality of
many other tax provisions that have long been on the books.
See Bruce Ackerman, Taxation and the Constitution,
99 Colum. L. Rev. 1, 52 (1999). We decline to do so today.
II. The MRT does not violate the Fifth Amendment’s
Due Process Clause
Retroactive legislation may violate the Fifth
Amendment’s Due Process Clause. See Landgraf v. USI
Film Prods., 511 U.S. 244, 266 (1994). “[T]he presumption
against retroactive legislation is deeply rooted in our
jurisprudence, and embodies a legal doctrine centuries older
than our Republic.” Id. at 265. We assume, without
deciding, that the MRT is retroactive.
While there is a presumption against retroactive laws,
retroactive tax legislation is often constitutional. See, e.g.,
United States v. Carlton, 512 U.S. 26, 30 (1994) (“[The
Supreme Court] repeatedly has upheld retroactive tax
legislation against a due process challenge.”); United States
v. Hemme, 476 U.S. 558, 568 (1986) (“[The Supreme Court]
has . . . made clear that some retrospective effect is not
necessarily fatal to a revenue law.”). To analyze a due
process challenge to retroactive tax legislation, we use the
“deferential” standard of “whether [the] retroactive
application itself serves a legitimate purpose by rational
means.” Quarty v. United States, 170 F.3d 961, 965 (9th Cir.
1999) (citing Carlton, 512 U.S. at 30–31).

-- 15 of 17 --

16 M OORE V . U NITED STATES
The MRT passes muster under Carlton. The TCJA was
a significant change in the U.S. tax code, shifting from a
worldwide toward a territorial tax system, at least in part
because of companies offshoring roughly $2.6 trillion in
profits. The MRT eliminated other taxes on CFCs’
undistributed earnings before 2018. So, if the MRT did not
tax the undistributed earnings, shareholders would have been
able to avoid taxation indefinitely on pre-2018 earnings. The
MRT, then, serves a legitimate purpose: it prevents CFC
shareholders who had not yet received distributions from
obtaining a windfall by never having to pay taxes on their
offshore earnings that have not yet been distributed.
The MRT accomplishes this legitimate purpose by
rational means. The MRT accelerates the effective
repatriation date of undistributed CFC earnings to a date
following passage of the TCJA. Having a single date of
repatriation is a rational administrative solution. The 30-
year repatriation period also coincided with additional IRS
reporting requirements, simplifying the calculation of taxes
by both taxpayers and the IRS.2
The Moores’ counterarguments are unpersuasive.
Although the Moores may have expected their tax to remain
deferred, their “reliance alone is insufficient to establish a
constitutional violation. Tax legislation is not a promise, and
a taxpayer has no vested right in the Internal Revenue Code.”
Carlton, 512 U.S. at 33. Further, while the MRT’s
retroactive period is long, it does not decide the analysis.
2 The MRT also provided a lower tax rate than many shareholders
would likely have paid otherwise: the MRT taxes CFC earnings at either
8% or 15.5%. And, taxpayers may also elect to pay the MRT in
installments over an eight-year period. See Section 965 Transition Tax,
The Internal Revenue Service, https://www.irs.gov/businesses/section-
965-transition-tax (last visited May 30, 2022).

-- 16 of 17 --

M OORE V . U NITED STATES 17
The Moores cannot cite a bright-line rule regarding how long
ago a retroactive tax can apply because courts deferentially
review tax legislation’s purpose on a case-by-case basis. See
Quarty, 170 F.3d at 965. Moreover, courts that have
considered the retroactive nature of tax legislation often only
view the period of retroactivity as one, non-dispositive
consideration. See, e.g., GPX Int’l Tire Corp. v. United
States, 780 F.3d 1136, 1142 (Fed. Cir. 2015) (discussing five
“considerations,” of which retroactivity was only one).
Nor is the MRT a “wholly new tax,” a label applied to
unconstitutionally retroactive taxes by early cases “under an
approach that has long since been discarded.” Quarty,
170 F.3d at 966 (quoting Carlton, 512 U.S. at 34). We have
very narrowly interpreted what qualifies as a “wholly new
tax,” determining that a “a new tax is imposed only when the
taxpayer has ‘no reason to suppose that any transactions of
the sort will be taxed at all.’” See Quarty, 170 F.3d at 967
(quoting United States v. Darusmont, 449 U.S. 292, 298
(1981)). The MRT is not a “wholly new tax” because prior
to the MRT, U.S. shareholders were taxed on CFC earnings
when they were distributed. The Moores had reason to
expect that such transactions would eventually be taxed. See
id. This is especially true because as 11% shareholders of
KisanKraft, the Moores were already subject to certain pre-
MRT taxes that applied to shareholders who owned at least
10% of a CFC regardless of whether earnings were
distributed. See 26 U.S.C. § 951(a)(1) (2007).
CONCLUSION
For the above reasons, we AFFIRM the district court’s
grant of the Government’s motion to dismiss and denial of
the Moores’ cross-motion for summary judgment.

-- 17 of 17 --