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Quiet Settlement in 831(b) Captive Insurance Tax Case

Two businessmen shaking hands over a background of $100 bills
March 19, 2020

By Saren Goldner and P. Bruce Wright
Eversheds Sutherland (US) LLP

Wilson v. Comm’r, Docket 26547-13 (Tax Court) was quietly settled at the end of February. The case had been in the Tax Court for some time, and after Avrahami was decided, supplemental briefs were requested by the court.

The facts of the case are very similar to Avrahami, as the captive in which the taxpayers had an interest participated in the same reinsurance pool as the captive in which the Avrahamis had an interest. Other than the attorney who put the program together, the Wilsons seemed to have had different advisers when it was decided to form the captive and participate in the pool.

The settlement apparently involved a disallowance of premium deduction and no penalty imposition.
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