The Internal Revenue Service's (IRS's) recent micro-captive insurance Tax Court win in Swift v. Commissioner provides some additional insight as to how the Tax Court may analyze future micro-captive cases.
On February 1, Judge Patrick J. Urda continued the Tax Court trend of disallowing deductions for premiums paid to micro-captives in Swift v. Commissioner.
The US Tax Court's latest 831(b) micro-captive decision in Keating determined that the arrangement did not constitute insurance.
The US Supreme Court has declined to consider the Delaware Department of Insurance's appeal of a federal appeals court ruling requiring the department to comply with an Internal Revenue Service (IRS) summons for information on two captive insurers domiciled in the state.
Under federal tax law, insurance companies are allowed to take a current deduction for unpaid losses, which is an expense that is paid over time. Without the deduction for unpaid losses, the tax code would be exceedingly burdensome for insurance companies.
An IRS summons for certain micro-captive information filed with the state of Delaware raises several interesting insurance business questions. Among them is whether some of the documents sought by the IRS can be produced electronically.
The Internal Revenue Service (IRS) recently addressed whether benefit payments to employees in a particular welfare benefit plan are includable in gross income. The IRS identified circumstances under which such benefit payments should be treated as wages for federal tax purposes.