Taxation

  Man holding red X

Reserve Mechanical, Part II: Motion for Reconsideration Denied

P. Bruce Wright and Saren Goldner extract the salient features of the US Tax Court's denial (without comment) of the taxpayer's motion for reconsideration in the "Reserve Mechanical" case. In order to seek any further relief, the taxpayer will need to appeal the case.
September 21, 2018 Read More
  Planning

Small Captive Insurance Program Exit Planning

After two consecutive losses for taxpayers involved in small captive insurance programs, some may consider exiting their small captive insurance program. Exiting a captive, however, may be time consuming and expensive. Many captive owners will need to take into account numerous issues and make some difficult decisions.
September 04, 2018 Read More
  Veto Stamp

Illinois Governor Supports Captive Provisions in Vetoed Legislation

Governor Bruce Rauner vetoed legislation Sunday that would set new minimum capital and surplus requirements for captive insurance companies licensed in Illinois. The governor said he supported the captive provisions in the legislation to make Illinois more attractive to companies using captive insurance.
August 27, 2018 Read More
  Tax Burden-SF

"Micro-Captive" Tax Updates from the North Carolina Captive Conference

At the North Carolina captive conference, Charles "Chaz" Lavelle, senior partner, Bingham Greenebaum Doll LLP, discussed Internal Revenue Code Section 831(b) changes over the last year.
August 24, 2018 Read More
  NCCIA 2018 Conference-Microsoft Session-SF

Microsoft's Captive Tax Issues Not Applicable in Most Other States

At the North Carolina captive insurance conference, Bruce Wright, a partner at Eversheds Sutherland (US) LLP, shared some insights surrounding Microsoft Corporation's Arizona captive insurance company (Cypress Insurance Company) payment of more than $875,000 for unpaid premium taxes and interest and penalties to the state of Washington.
August 23, 2018 Read More
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Transfer Pricing and Captive Insurance: The Importance of Substance

Transfer pricing is the number one international tax issue facing multinational enterprises. For tax purposes, transfer prices should be determined in accordance with the arm's-length principle. The arm's-length principle also applies to captive insurance and whether insurance premiums paid to a captive insurance company are arm's length or not.
August 22, 2018 Read More
  Tax Laws 2-SF

Microsoft Settles, Washington Asks Captives To "Pay Their Fair Share"

Microsoft Corporation's Arizona captive insurance company will pay more than $875,000 for unpaid premium taxes and interest and penalties, ending a cease-and- desist order issued in May by State of Washington Insurance Commissioner Mike Kreidler.
August 15, 2018 Read More
  Bruce Wright Featured Video-SF

Captive Insurance and Direct Placement Taxes Explained

Bruce Wright of Eversheds Sutherland explains the Dodd-Frank legislation and direct placement taxes. Direct placement taxes (direct procurement taxes) apply to surplus lines placements as well as placements with any nonadmitted company, such as a captive insurer. The "home state" controls where the payment of this tax is concerned.
August 15, 2018 Read More
  Cease and Desist 480x377

Update from Vermont on the Microsoft Captive Cease and Desist Order

Read about what was said at the recent Vermont Captive Insurance Association Annual Conference surrounding the order from the Washington State Office of the Insurance Commissioner, which told Microsoft's wholly owned Arizona captive insurer to cease and desist transacting insurance business in the state and stop soliciting and writing insurance coverage for Washington insureds.
August 10, 2018 Read More
  Tax Stamp 480x377

953(d) Elections—The Basics

An article from Saren Goldner and P. Bruce Wright, partners in the tax department of Eversheds Sutherland (US) LLP, provides a basic overview of requirements, procedures, and compliance aspects surrounding the 953(d) election.
July 31, 2018 Read More
  Capstone 600x300

Capstone Part 2: Commentary on "Reserve Mechanical" Policy Pricing

Capstone Associated Services, Ltd., focuses on policy pricing in its second follow-up commentary about the "Reserve Mech. Corp. v. Commissioner" case.
July 11, 2018 Read More
  Stewart Feldman

Captive Insurer Tax Challenges

Stewart Feldman, CEO of Capstone Associated Services, says that captive insurance taxation issues concern three areas: 1) risk transfer, 2) risk distribution, and 3) common notions of insurance. For a captive, the focus should be on the insurance aspects of the transaction with the financial and tax aspects being secondary.
July 11, 2018 Read More
  tax wooden blocks with gavel SF

A.M. Best Revisits Tax Law Impacts on Captive Insurer Ratings

A.M. Best said that the impact of tax reform is generally a positive for US-domiciled captives and a mixed bag for offshore captive insurance companies, though in some cases, it is a positive for offshore captives that have made the section 953(d) election under the Internal Revenue Code.
June 29, 2018 Read More
  Capstone 600x300

Capstone: "Does Captive Insurance Exist after the 'Reserve' Decision?"

Capstone Associated Services, Ltd., provides additional commentary about the Reserve Mech. Corp. v. Commissioner case in a piece titled, "Does Captive Insurance Exist after the 'Reserve' Decision?"
June 28, 2018 Read More
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Captive Insurance Industry Insights into the "Reserve Mechanical" Case

As a follow-up to our previous posts on "Reserve Mech. Corp. v. Commissioner," Captive.com recently touched base with a number of captive insurance industry professionals to share their insights on the Tax Court's decision. Here are their thoughts.
June 26, 2018 Read More
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Direct Placement Tax Decision from the Tax Court of New Jersey

The Tax Court of New Jersey recently rendered an interesting decision regarding direct placement taxes. Eversheds Sutherland discusses Johnson & Johnson v. Director, Division of Taxation and Commissioner, Department of Banking and Insurance.
June 22, 2018 Read More
  tax wooden blocks with gavel SF

Tax Court Issues Second Small Insurance Company Case

On June 18, 2018, the US Tax Court issued its opinion in Reserve Mechanical Corp. v. Commissioner, holding for the IRS. Eversheds Sutherland says that the facts of the case appear substantially similar to LTR 201609008, issued by the IRS in 2016.
June 21, 2018 Read More
  Bruce Wright

Captive Insurance Risk Pooling Explained

According to Bruce Wright of Eversheds Sutherland, risk pools in captives allow organizations to spread risk and provide for a tax benefit. Risk pools provide unrelated risk to a captive insurer so the parent corporation can take a deduction for premium paid to the captive using insurance accounting.
June 20, 2018 Read More
  Washington State 480x377

Microsoft Captive Insurer Ordered To Cease and Desist

The Washington State Office of the Insurance Commissioner has ordered an Arizona captive owned by Microsoft that provides coverage to the Microsoft group of companies to cease and desist transacting insurance business in the state and soliciting and writing insurance coverage for Washington insureds.
May 16, 2018 Read More
  Bruce Wright

Insights into the Avrahami and Feedback Decision

On August 21, 2017, the US Tax Court decided two companion cases, Avrahami v. Commissioner and Feedback Insurance Company v. Commissioner, involving various issues surrounding the formation and operation of a captive insurance company in Saint Kitts. Bruce Wright of Eversheds Sutherland reviews the federal analysis by the Tax Court.
April 30, 2018 Read More