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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.
  • 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.
  • 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.
  • 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.
  • Small Captive Insurance Company Rules Updated for Technical Corrections The Consolidated Appropriations Act of 2018 was enacted on March 23, 2018, and included amendments to IRC section 831(b). Most importantly, the Act clarifies that for purposes of the first diversification test of section 831(b), the term "policyholder" refers to the direct insured under a policy and not to a reinsured.
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  tax wooden blocks with gavel SF

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
  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
  Tax 480x377

Small Captive Insurance Company Rules Updated for Technical Corrections

The Consolidated Appropriations Act of 2018 was enacted on March 23, 2018, and included amendments to IRC section 831(b). Most importantly, the Act clarifies that for purposes of the first diversification test of section 831(b), the term "policyholder" refers to the direct insured under a policy and not to a reinsured.
April 13, 2018 Read More
  IRS Dirty Dozen-SF

For the Fourth Consecutive Year, Captives Make IRS "Dirty Dozen" List

For the fourth consecutive year, "abusive micro-captives" make an appearance on the Internal Revenue Service (IRS) annual "Dirty Dozen" list of tax scams, reflected in IR-2018-62. In the 2018 version, the IRS warns taxpayers about the abuse of micro-captives and includes commentary on the IRS victory in Avrahami v. Commissioner.
April 02, 2018 Read More
  Avrahami CICA panel 480 x 377

Avrahami Panel: "A Captive Is Not a Piggy Bank"

In the wake of the Avrahami decision, micro-captives have found themselves on the Internal Revenue Service 2018 "Dirty Dozen" tax scam list for the fourth year in a row. An Avrahami panel at the Captive Insurance Companies Association conference provided beneficial insights for small captive insurers.
March 26, 2018 Read More
  Tax Cut 600x300

Will the Tax Cuts and Jobs Act Affect Small Captive Insurance Companies?

The end of 2017 delivered uncertain tidings concerning what effect the Tax Cuts and Jobs Act would have on the captive insurance industry. While the law affects larger captive insurers, changes are less significant for smaller captives. Management Services International provides its view on the tax law and small captive insurance companies.
February 16, 2018 Read More
  Tax Men 480x377

Captive Insurers and the Base Erosion Anti-Abuse Tax

The Base Erosion Anti-Abuse Tax imposes a 10 percent minimum tax on corporate US taxpayers. Premium payments made by US taxpayers to their non-US captive insurers and loss payments made by US captive insurers to their non-US insureds are among the amounts characterized as base erosion payments.
January 26, 2018 Read More
  Bermuda-Boats-SF

Fitch: Tax Reforms Reduce Advantage of Reinsuring US Risks to Bermuda

US tax reforms are credit negative for the Bermuda re/insurance market, Fitch Ratings said. The cut in the US corporate tax rate and a new tax on premiums ceded by US insurers to foreign reinsurers will reduce the tax advantage of reinsuring US risks to Bermuda and other international reinsurers.
January 25, 2018 Read More
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