captive micro reportable transaction Published on Published onMarch 6, 2018 Edit article View stats Lance Wallach Lance Wallach Abusive tax shelters, 419, section 79, 412i micro captive insurance, VEBA, expert witness, author, speaker 785 articles Like 0 Comment 0
Notice 2016-66 – Section 831(b) Micro-Captive Transactions. Micro-captive arrangements described in the Notice became a reportable transaction on November 1, 2016. This Notice identifies as a transaction of interest the micro-captive transaction where a taxpayer enters into a purported insurance contract with a captive insurance company (“Captive”), or a purported reinsurance contract with a Captive through an intermediary insurance company, and where a Captive is at least 20 percent owned by the taxpayer or/and related parties. In addition, the micro-captive transaction has one or both of the following characteristics: 1) the amount of Captive’s liabilities for insured losses and claim administration expenses is less than 70 percent of the Captive’s earned premiums less paid policyholder dividends, or 2) Captive made available through a guarantee, a loan, or other transfer of Captive’s capital, any portion of payments received under contracts to the taxpayer or its owners. The taxpayer, an “insured” entity under the contract, claims ordinary deductions for purported insurance or reinsurance premiums while a Captive elects under § 831(b) of the Internal Revenue Code to be taxed only on investment income. Captive excludes the payments directly or indirectly received under the contracts from its taxable income.
Notice 2017-8 – Section 831(b) Micro-Captive Transactions, amends the due date for filing of a disclosure with the Office of Tax Shelter Analysis for Notice 2016-66 transactions.
captive micro reportable transaction
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Lance Wallach
Lance Wallach
Abusive tax shelters, 419, section 79, 412i micro captive insurance, VEBA, expert witness, author, speaker
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Notice 2016-66 – Section 831(b) Micro-Captive Transactions. Micro-captive arrangements described in the Notice became a reportable transaction on November 1, 2016. This Notice identifies as a transaction of interest the micro-captive transaction where a taxpayer enters into a purported insurance contract with a captive insurance company (“Captive”), or a purported reinsurance contract with a Captive through an intermediary insurance company, and where a Captive is at least 20 percent owned by the taxpayer or/and related parties. In addition, the micro-captive transaction has one or both of the following characteristics: 1) the amount of Captive’s liabilities for insured losses and claim administration expenses is less than 70 percent of the Captive’s earned premiums less paid policyholder dividends, or 2) Captive made available through a guarantee, a loan, or other transfer of Captive’s capital, any portion of payments received under contracts to the taxpayer or its owners. The taxpayer, an “insured” entity under the contract, claims ordinary deductions for purported insurance or reinsurance premiums while a Captive elects under § 831(b) of the Internal Revenue Code to be taxed only on investment income. Captive excludes the payments directly or indirectly received under the contracts from its taxable income.
Notice 2017-8 – Section 831(b) Micro-Captive Transactions, amends the due date for filing of a disclosure with the Office of Tax Shelter Analysis for Notice 2016-66 transactions.