I set up a custom taxonomy called 'portfolio-cats' to be similar to categories but for my custom post type 'portfolio'.
the problem i am seeing is that i add a 3rd level term... let's say I'm adding "House" w/ Television as a parent
then the term shows up in the list of terms on the right, but on refresh it disappears. I've checked my DB and the term is definitely in there. You can also see it in the dropdown when you go to add a new term and select that new term's parent.
might be easiest to just look at my screenshot:
i think that this is also effecting my wp_list_categories() when used w/ my taxonomy. i have tried to set wp_list_categories to show the children of "Print" but it only goes one level deep and does not show "House" even though that is a non-empty descendant of the "Print" term.