Tax Legal Services · Primary-source case analysis

Moore: Three Attempts to Distinguish the MRT From Established Taxes Failed

By Aneeta Mishra and Timothy Chan

Published September 8, 2026 · Updated October 18, 2026

Decision: Moore v. United States, 602 U.S. 572 (2024).

The Moores conceded that partnership, S-corporation, and Subpart F taxes were constitutional, but argued that the Mandatory Repatriation Tax was different. Moore v. United States, 602 U.S. 572 (2024), explains why each proposed distinction failed. This analysis follows those three arguments rather than treating the decision as a general answer to every tax on undistributed income.

Partnership history did not make pass-through treatment inherent

The first proposed distinction was that partners could be taxed on partnership income because partnerships historically were not separate legal entities. The majority rejected that categorical history. It identified state and federal treatment of partnerships as separate entities in relevant contexts, including taxes imposed directly on partnerships. Flexibility in how partnership law treats an entity did not establish that pass-through taxation was constitutionally inherent rather than a legislative choice. Moore, slip op. at 17–19.

Shareholder consent did not explain S-corporation taxation

The second argument was consent: S-corporation shareholders choose that treatment, unlike the shareholders subject to the MRT. The Court answered that minority shareholders may remain subject to S-corporation treatment even when they no longer consent, because revocation requires majority agreement. More fundamentally, shareholder consent could not eliminate a structural constitutional apportionment requirement if it otherwise applied. The majority therefore viewed S-corporation taxation as another exercise of Congress’s attribution authority, not an exception explained by unanimous consent. Moore, slip op. at 19.

Constructive realization did not distinguish Subpart F

Third, the Moores invoked what they called constructive realization to distinguish longstanding Subpart F taxation from the MRT. The majority found no established use of that label in the Court’s cases or Code and held that the proposed distinction failed even on its own terms. The asserted control threshold did not separate the two regimes, and the Moores had conceded Subpart F’s constitutionality. The Court did not adopt constructive realization as a new legal test for future returns. Moore, slip op. at 19–21.

The rejected distinctions did not erase the holding’s limits

Rejecting those distinctions did not decide every possible attribution or realization question. The Court limited its holding to shareholders taxed on attributed income realized by an entity treated as a pass-through, where the entity itself had not been taxed on that income. It reserved broader realization, appreciation, and wealth-tax questions, and the Moores had not sought review of their separate retroactivity challenge. Read the failed distinctions alongside those express limits. For the broader shareholder overview, see what the MRT decision held. Moore, slip op. at 21 footnote 6, 22–24.

Key takeaways

• Identify the concession or established tax regime against which a proposed distinction is being tested.
• Do not assume state-law entity labels alone determine Congress’s constitutional taxing authority.
• Distinguish shareholder consent from a structural constitutional requirement.
• Do not convert a rejected litigant’s label into a new tax doctrine.