This gist creates a list of custom taxonomy terms in Wordpress. - It will display the child terms of a the current taxonomy term that is being viewed. - If the term being viewed is a child term, it will show the child terms of its parent. - The children of other terms will be hidden.

sidebar_taxonomy_term_list.php

<?php

// List Custom Taxonomy Terms Based on Current View

// Setup global variables
$current_taxonomy = 'project_status';
$current_term_id = get_queried_object()->term_id;
$terms = get_terms($current_taxonomy);

// For a Single Post, get the ID of each term used
$allTerms= wp_get_object_terms($post->ID, $current_taxonomy);
// Put all term IDs into an array
$termsArray = array();
foreach ($allTerms as $eachTerm) {
  $eachTermId = $eachTerm->term_id;
  $termsArray[] = $eachTermId;
}

foreach($terms as $term) {
  // Setup Term Variables
  $termID = $term->term_id;
  $termParent = $term->parent;
  $termName = $term->name;
  $termLink = get_term_link( $term, $current_taxonomy );
  $termchildren = get_term_children( $termID, $current_taxonomy );

  // Get Each Parent Category
  if($termParent == 0) {

    // If the term being written matches the term being displayed:
    if($current_term_id == $termID || in_array($current_term_id, $termchildren) || in_array($termID, $termsArray) ) { 
      
      // If the current term is a parent, write the name and link, add current class
      if($current_term_id == $termID) {
        echo '<li class="current-cat"><a href="'. $termLink . '">All ' . $termName . '</a>'; // Note: this add 'All' to the begining of the line
      } else {
        echo '<li><a href="'. $termLink . '">All ' . $termName . '</a>'; // Note: this add 'All' to the begining of the line
      }
        
        // Write Child terms, names, and links        
        echo '<ul class="children">';
          
          foreach ( $termchildren as $child ) {
            $childTerm = get_term_by( 'id', $child, $current_taxonomy );
            $childLink = get_term_link( $childTerm, $current_taxonomy );
            $count = $childTerm->count;
            
            if($count != 0) {
              if($current_term_id == $child || is_single() && in_array($child, $termsArray)) {
                echo '<li class="current-cat"><a href="'. $childLink .'">' . $childTerm->name . '</a></li>';
              } else {
                echo '<li><a href="'. $childLink .'">' . $childTerm->name . '</a></li>';
              }
            }
          }
        
        echo '</ul>';
        
      // Close out the Parentlist
      echo '</li>';
   
    // Otherwise
    } else {
      echo '<li><a href="'. $termLink . '">All ' . $term->name . '</a></li>'; // Note: this add 'All' to the begining of the line
    }

  }

}; 

?>