What’s Adequate Risk Distribution After Recent Trilogy of Captive Tax Cases?

In three recent cases, the U.S. Tax Court found related-party insurance companies (captive insurance companies) didn’t sufficiently distribute risk to allow the insured parties to deduct their premium payments. In an article recently published by Bloomberg Tax, Laurie Bizzell of Bennett Thrasher analyzes the cases, the court’s historical view and the IRS’ position to find there is no conclusive definition of risk distribution.  However, there is an opportunity for taxpayers to present facts that will challenge the IRS to determine what is more important; the number of  independent risk exposures or a specific number of insured entities.

The full Bloomberg Tax article can be found here.

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For more information on captive insurance, contact Laurie Bizzell by calling 770.396.2200.