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Held Captive: Micro-Captive Insurance in the Aftermath of Avrahami

In Captive Insurance by Jason FreemanLeave a Comment

The IRS recently notched a victory in the much-anticipated Tax Court decision of Avrahami v. Commissioner—the first micro-captive insurance decision to go to press.  The court’s 105-page opinion dealt a blow to the micro-captive insurance industry, which has been under increased IRS scrutiny in recent years.  And with several similar cases still in the pipeline, some have questioned whether it …

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The IRS and Captive Insurance Arrangements

In Captive Insurance by Jason FreemanLeave a Comment

For years now, the IRS has been targeting abusive captive insurance arrangements.  Since 2015, captives have adorned the IRS’s annual “Dirty Dozen” list of tax scams.  The IRS’s Large Business and International Division’s (LB&I) tax compliance campaign has made captives a priority.  And last year, the Service issued Notice 2016-66, describing certain related-party captive insurance transactions as “transactions of interest,” …

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The Tax Court Deals a Blow to “Micro-Captive” Insurance Company

In Captive Insurance by Jason FreemanLeave a Comment

The Tax Court recently issued a much-anticipated decision in Avrahami v. Commissioner (a copy of the opinion is available here).  At issue: an IRS challenge to deductions taken by the taxpayer for premiums paid to a “micro-captive” insurance company.  In a victory for the IRS, the Tax Court denied the deductions at issue, finding that the amounts paid did not …