KPMG report: Treatment of captive insurance arrangements as insurance companies for tax purposes
Importance of considering all facts and circumstances for each individual captive arrangement
Importance of considering all facts and circumstances for each individual captive arrangem
Captive insurance companies have long been used by businesses to insure related-party risks. The IRS has vigorously scrutinized and sometimes challenged captives. In an attempt to provide parameters for captive insurance arrangements to be treated as insurance companies for federal income tax purposes, the IRS and Treasury Department have issued a variety of guidance. For the past several years, the government has focused its challenges on so-called “micro captives” that have elected special tax treatment under section 831(b).
Read a May 2023 report* [PDF 127 KB] prepared by KPMG LLP tax professionals that discusses the importance of considering all facts and circumstances for each individual captive arrangement to determine if that captive should be taxed as an insurance company.
*This article originally appeared in Volume 20, Issue 1 of CCH's Journal of Taxation of Financial Products and is provided with permission.
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