| Tax Shelter
Disclosure Regulations. |
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These regulations were first
published 3/2/00
as temporary regulations requiring a corporate
taxpayer to make appropriate disclosure if it
engages in either: (i) a "listed transaction"
as defined; or (ii) a transaction that reduces
taxes by $10 million and that meets 2 of 6 other
criteria -- unless that transaction is in the
ordinary course of business. These regulations
were modified on 8/16/00,
on 8/7/01,
and on 6/18/02
to include non-corporate taxpayers. Revised temporary
regulations were published on 10/22/02,
effective 1/1/03, and expanded to require disclosure
if a transaction meets any one of six criteria.
Final regulations,
published and effective 2/28/03, basically follow
the revised temporary regulations published on
10/22/02. |
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| State Independently
Procured Premium Taxes |
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Dow
Chemical Company v. Carole Keeton Rylander, Comptroller
of State of Texas, 38 S.W.3d 741 (Tex. App.-Austin[3rd
Dist.] 2001, cert denied) |
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This
case again declared Texas' independently procured
premium tax unconstitutional. |
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State
Board of Insurance v. Todd Shipyards Corp., 370
U.S. 451 (1962) |
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Landmark
U.S. Supreme Court case limiting a state's ability
to tax a foreign domiciled insurer. |
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Additional Background on
Captive Planning (to come) |
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Captive
Structuring |
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IRS
Revenue Ruling 2001-31 |
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In this ruling, the IRS abandoned
the "economic family" doctrine which the Service
used to attack captive planning. |
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UPS
v. Commissioner, 254
F.3d 1014 (11 Cir. 2001) |
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In this significant
case, the taxpayer's tax motivation for forming
a captive was upheld in a $2 billion victory for
the taxpayer. |
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Humana,
Inc. v. Commissioner, 881 F.2d 247 (6th Cir.
1989) |
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In this landmark case, the
Service lost its "economic family" argument. |
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Kidde
Industries v. U.S., 40 Fed. Cl. 42 (1997) |
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Holds that Humana case applies
to brother-sister subsidiaries and not divisions. |
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IRS
Notice 2002-70. |
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In this November 2002 pronouncement,
the IRS announced that captive transactions utilizing
certain reinsurance arrangements (so-called "PORCs")
resulting in shifting of income will be "listed
transactions" for purposes of Reg. Sec. 1.6011-4. |
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IRS
Revenue Procedure 2002-75. |
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In this publication, the IRS
announced that it will now consider ruling requests
on the tax treatment of captives. |
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IRS
Revenue Ruling 2002-89. |
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In this ruling, the IRS determined
that where a captive derives 50% of its premiums
from underwriting its parent's risks (with the
other 50% of premium revenue from unrelated parties),
there was sufficient risk distribution to constitute
"insurance." |
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IRS
Revenue Ruling 2002-90. |
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In this pronouncement, the
IRS ruled that a captive which insured 12 subsidiaries
of a common parent, with no unrelated insurance
underwriting, had sufficient risk distribution
to constitute "insurance." |
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IRS
Revenue Ruling 2002-91. |
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In this ruling, the IRS determined
that if within a group captive no one member's
covered risks exceeded 15% of the group's total
risks, then that captive possessed sufficient
risk distribution to constitute "insurance." |
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Article
from New York Times 4/1/03 "Insurance Loophole
Helps Rich" |
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Article
from New York Times 4/4/03 "Tiny Insurers
Face Scrutiny As Tax Shields" |
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IRS
Revenue Ruling 2005-40 |
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In this pronouncement,
the IRS discusses the qualifications of certian
arrangements as " insurance" for federal
income tax purposes and specifically addresses
the risk distribution requirement of a purported
insurance contract under four fact scenarios
listed in the ruling. |
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Client Mailings and Client
Memoranda RESTRICTED ACCESS |
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THE FELDMAN LAw Firm
LLP
Galleria Tower II 
Post Oak Tower
5051 Westheimer, Suite 1850
Houston, TX 77056-5604
713/850-0700
Fax: 713/850-8530
info@feldlaw.com
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