United States:
Tax Court Rejects Captive Insurance Company Status Under 501(C)(15)
22 August 2018
Carlton Fields
To print this article, all you need is to be registered or login on Mondaq.com.
Petitioner, a captive insurer domiciled in Anguilla, applied to
be a tax-exempt small insurance company under IRC section
501(c)(15), and filed returns on this basis, making an election
under IRC section 953(d). The Tax Court concluded this
characterization was not appropriate, that Petitioner was not a
bona fide insurance company, and that Petitioner should instead be
treated as a foreign corporation.
The Tax Court found the reinsurance agreements did not allow
Petitioner to effectively distribute risk, and in the absence of
risk distribution, "a necessary component of insurance"
Petitioner's transactions were not insurance transactions.
Reserve Mechanical Corp. v. Commissioner of
Internal Revenue, Docket No. 14545-16 (U.S. Tax Court June 18,
2018)
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
POPULAR ARTICLES ON: Insurance from United States
D&O Insurance Myths (Part 2) (Video)
Lowenstein Sandler
Last month we discussed the importance of Directors and Officers (D&O) insurance and set the record straight on some common misconceptions about it.
Faulty Workmanship Coverage Update
Plunkett & Cooney
The Washington Supreme Court affirmed the Washington Court of Appeals ruling that coverage for repairs to the Gardens Condominium's roof components was available under the resulting loss exception to the insurance policy's faulty workmanship exclusion.
Priority Of Coverage: Debunking "Other Insurance" Myths
Lowenstein Sandler
Today on "Don't Take No For An Answer," host Lynda A. Bennett is joined by Alexander B. Corson for a discussion about priority of coverage, or who pays what when there are numerous claims, parties, and policies at play.