In a follow-up letter to the editor recently published by Tax Notes International, Michael Karlin continues his debate about Moore v. United States, responding to Professor Reuven S. Avi-Yonah and Professor Mindy Herzfeld’s criticisms of the Moores’ tax planning when they invested in an Indian company.
Michael argues strongly against the idea that the Moores should have considered alternate strategies when making their investment so as to avoid tax consequences, stressing that no individual taxpayer could have predicted changes that would come years later.
“As a matter of policy,” Michael shares in his letter, “We should legislate with some regard for the reasonable expectations of taxpayers. I don’t have a problem with the basic concepts of subpart F and GILTI (although many of the details could use some refinement). I don’t think the Moore case should overturn them. But section 965 is another matter. Unlike GILTI, which began to be applied in 2018, section 965 tried to pick up income earned many years before for which taxpayers had been granted deferral tied to when profits were actually distributed. At least individual taxpayers should have been left alone.”
Read Michael’s full comments in the letter below.