Most Americans don’t spend much time thinking about Internal Revenue Service policy, nor should they have to. They’re supposed to trust that the agency will apply the rules the same way every time so businesses can plan ahead, invest, and innovate. Investment decisions, research and development, job creation, and mergers and acquisitions depend on stable, predictable tax rules. But when the IRS abruptly reinterprets long-standing tax rules, especially by retroactively reclassifying routine business expenses, it injects uncertainty into markets that depend on clear and consistent guidance.

This concern has become more acute in recent months as the IRS has undergone notable internal shifts, capped by President Donald Trump’s decision to withdraw Donald Korb’s nomination for Chief Counsel. The move reflects deeper concerns about how the agency’s legal positions shape economic behavior—from the cost of capital to the incentives behind mergers and investment. The clearest example is the IRS’s effort to recast ordinary breakup fees as capital losses—a shift that would reshape how firms approach risk and investment.

The recent Tax Court ruling in AbbVie v. Commissioner underscores why this issue matters. The court held that the breakup........

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