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Captive Insurance: Feds Promote Tax Benefits, but Pay Attention to the Details

Baker Donelson discusses benefits of captive insurance companies.  Its article begins as follows:

Recent IRS rulings and a U.S. Tax Court decision continue to lay a solid foundation for captive insurance companies. However, the tax requirements must be strictly followed. Below we provide an update to assist captives in achieving their tax objectives.

A captive insurance company (or “captive”) is an insurance company formed under the laws of and regulated by a state or foreign jurisdiction by a business to insure (or reinsure) the risks of that business or of related or affiliated entities. A captive can convert non-tax deductible self-insured risk into tax deductible insurance premiums while satisfying a variety of business purposes, including augmenting existing commercial coverage, providing access to the reinsurance market, and providing insurance for risks where commercial coverage costs are economically unattractive.

To read more, see Captive Insurance: Feds Promote Tax Benefits, but Pay Attention to the Details | Baker Donelson – JDSupra.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.

1 Comment

  1. Most insurance companies were established to provide coverage where insurance was unavailable or unreasonably priced. Like any insurance company, captives tend to accumulate a considerable amount of assets in reserves and surplus. Columbia Captive Insurance Company provides tax and non tax benefits under IRS Tax code 831(b) in Las Vegas, Nevada at http://www.columbiacaptive.com/.

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