Legal Developments
Bermuda Court Rules on Captive Insurance Manager's Duty of Care to Shareholders
The Supreme Court of Bermuda ruled that a captive insurance manager did not owe a separate duty of care to shareholders following fraudulent dividend payments. The decision highlights the importance of management agreements, contractual responsibilities, and governance structures in determining legal accountability among captive owners, managers, and other stakeholders. Learn More
Tax Court Imposes Penalties in Jones Micro-Captive Case
The US Tax Court imposed accuracy-related penalties in the Jones micro-captive litigation after finding the disputed 2015 captive transaction lacked economic substance. The court sustained 40 percent penalties against certain petitioners, while Clear Sky Insurance faces a 20 percent penalty. A separate 20 percent penalty applies to the Shors for 2016. Learn More
Federal Court Upholds IRS Micro-Captive Transactions of Interest Rule
A federal district court upheld the Internal Revenue Service (IRS) 2025 transactions of interest reporting rule for certain micro-captive insurance arrangements, finding Treasury reasonably supported the regulation under the Administrative Procedure Act. The court did not revisit the listed transaction rule, which had already been vacated in the separate Drake Plastics decision. Read More
CIC Services Appeals IRS Micro-Captive Rule to Sixth Circuit
CIC Services has appealed a federal court ruling that upheld the Internal Revenue Service's (IRS's) micro-captive insurance regulations. The appeal challenges the agency's authority to designate certain Section 831(b) captive arrangements as listed transactions and transactions of interest, while arguing the rule conflicts with statutory requirements and lacks adequate support. Read More
What the Drake Plastics IRS Ruling Means for 831(b) Captives
In this Q&A, Dustin Carlson, President of The 831(b) Institute, examines the Drake Plastics court decision and its implications for 831(b) captive insurance companies. The discussion covers Internal Revenue Service (IRS) reporting requirements, transactions of interest, listed transactions, regulatory concerns, and how the ruling may influence the future of micro-captive insurance. Read More
What the Drake Plastics Ruling Actually Means for Micro-Captive Owners
The 831(b) Institute discusses the implications of the Drake Plastics ruling on Internal Revenue Service (IRS) oversight of 831(b) captive insurance arrangements. The discussion addresses "transactions of interest," "listed transactions," legitimate risk management structures, and how the ruling could influence future IRS guidance, enforcement activity, and compliance considerations for captive insurance participants. Read More
Texas Court Partially Strikes IRS Micro-Captive Rule
A Texas federal court issued a split ruling on Internal Revenue Service (IRS) micro-captive regulations, striking down the listed transaction designation while upholding transaction-of-interest reporting rules. The decision maintains disclosure requirements for Section 831(b) captives, but it could limit enforcement and penalties tied to the stricter listed transaction classification. Read More