Description: This study presents turbulence kinetic energy (TKE) budget terms above tall, deciduous walnut canopy in the wintertime stable boundary layer (SBL) and makes a comparison to well-known results of horizontally-homogeneous and flat (HHF) terrain. Turbulence measurements performed at five levels above the canopy height (approximately h =18 m) enable the investigation of joint effect of the roughness sublayer (RSL) and the transition layer on the TKE budget terms. Each term of the TKE budget is investigated within the framework of local similarity theory. Kolomogorov’s similarity hypothesis assumes local isotropy within the inertial subrange. Thoroughly testing the local isotropy hypothesis for the present data set results in a ratio of the horizontal spectral densities ( S v / S u ) approaching 4/3 , while the ratio of the vertical to the longitudinal spectral density ( S w / S u ) is less than the canonical value of 4/3 (even less than 1) for all levels indicating anisotropic turbulence even at very small scales above the canopy. As a consequence, estimated values of TKE dissipation rate ( ε ) from the vertical component are smaller than those obtained from the horizontal velocity components. This finding has a direct influence on the applicability of classical Kansas spectral models valid for HHF terrain as well as on the budget of wind variances. Additionally, the behavior of the non-dimensional gradient of mean wind speed is tested with regard to conformity to z -less scaling requirements (i.e., linear dependence on stability). It is confirmed that a stability threshold (such as Rf  〉 0.25 , where Rf is the flux Richardson number) is a stronger determinant of z -less behavior than the existence of a well-defined inertial subrange - opposite to observations in the SBL over ideal flat surfaces. Finally, the local equilibrium between the production and destruction of TKE within the RSL and transition layer is analyzed.