Articles & CASES

Firms Pass Up Tax Breaks, Citing Hassles, Complexities - Wall Street Journal
Estate and Gift Articles
The Living By-Pass Trust: Maximizing Today's Opportunities With Traditional Strategies--January 2012
To Give Without Giving--October 2011
Planning Opportunities Abound--September 2011
Planning Opportunities In A Low Interest Rate Environment--September 2011
Tax Shelter Disclosure Regulations.
  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.
 
State Independently Procured Premium Taxes
Dow Chemical Company, Appellant v. Carole Keeton Rylander, Comptroller of Public Accounts of the State of Texas; and John Cornyn, Attorney General of the State of Texas, Appellees
 

This case again declared Texas' independently procured premium tax unconstitutional.

370 US 451 State Board of Insurance v. Todd Shipyards Corporation
 

Landmark U.S. Supreme Court case limiting a state's ability to tax a foreign domiciled insurer.

 
Nonadmitted and Reinsurance Reform Act
White Paper Discussing the Nonadmitted and Reinsurance Reform Act of 2010 and Its Potential Application to Captive Insurance

This white paper analyzes the Nonadmitted and Reinsurance Reform Act of 2010 and concludes that the NRRA does not apply to captive insurance.

Captive Insurance Experts Continue to Weigh In on Nonadmitted and Reinsurance Reform Act: No Captive Insurance Impact

This article discusses the growing consensus among industry experts that the Nonadmitted and Reinsurance Reform Act does not apply to captive insurance.

Potential state tax implications of Nonadmitted and Reinsurance Reform Act of 2010 for captive insurance company arrangements

This article discusses the application of the Nonadmitted and Reinsurance Reform Act of 2010 to captive insurance and warns that captive insurers must evaluate the state tax implications of the NRRA. The article advises that the NRRA may apply.

 
ADDITIONAL BACKGROUND ON ALTERNATIVE RISK/ CAPTIVE INSURANCE PLANNING
   
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Captive Structuring
Rent-A-Center, and Affiliated Subsidiaries, Petitioners v. Commissioner of Internal Revenue, Respondent
Humana, Inc. v. Commissioner 1 881 F.2d 247 (6th Cir. 1989) United States Court of Appeals for the Sixth Circuit Humana Inc., Petitioner-Appellant, v. Commissioner of Internal Revenue Respondent-Appellee
In this landmark case, the Service lost its "economic family" argument.
Gulf Oil Corp. v. Commissioner 914 F.2d 396, 66 A.F.T.R.2d 90-5552, 90-2 USTC P 50,496 (3rd Cir. 1990) United States Court of Appeals, Third Circuit.
Harper v. Commissoner 979 F.2d 1341 (9th Cir. 1992) United States Court of Appeals, Ninth Circuit.
Amerco, Inc. v. Commissioner 979 F.2d 162 (9th Cir. 1992) United States Court of Appeals, Ninth Circuit.
Sears, Roebuck & Co. v. Commissioner 972 F.2d 858 (7th Cir. 1992) United States Court of Appeals, Seventh Circuit.
Ocean Drilling & Exploration Co. v. 988 F.2d 1135 (Fed.Cir. 1993) United States Court of Appeals, Federal Circuit.
Malone & Hyde, Inc. v. Commissioner 62 F.3d 835 (6th Cir. 1995) United States Court of Appeals, Sixth Circuit.

Allgeyer v. Louisiana. No. 446. Supreme Court of the United States.

Connecticut General Life Insurance Co. v. Johnson, Treasurer of California. No. 316. Supreme Court of the United States.

St. Louis Cotton Compress Company v. State of Arkansas. No. 120. Supreme Court of the United States.

Susan Combs, Comptroller of Public Accounts of the State of Texas, and Greg Abbott, Attorney General of the State of Texas, Appellants v.STP Nuclear Operating Company, Appellee

Kidde Industries, Inc. v. United States 40 Fed.Cl. 42 (Fed.Cl. 1997)
Holds that Humana case applies to brother-sister subsidiaries and not divisions.
United Parcel Service of America, Inc. v. Commissioner of Internal Revenue, 254 F.3d 1014 (11th Cir. 06/20/2001)
In this significant case, the taxpayer's tax motivation for forming a captive was upheld in a $2 billion victory for the taxpayer.
Treas. Reg. Section 1.337(d)-4 abd Exempt Organizations
  The IRS issued final regulations generally affecting a taxable corporation that transfers all or substantially all of its assets to a tax-exempt entity or converts from a taxable corporation to a tax-exempt entity in a transaction other than a liquidation.
Rev. Rul. 2001-31, 2001-26 I.R.B. 1348 (6/25/2001)
In this ruling, the IRS abandoned the "economic family" doctrine which the Service used to attack captive planning.
Cumulative Bulletin Notice 2001-51, I.R.B. 2001-34, August 2, 2001
  On February 28, 2000, the Internal Revenue Service issued Notice 2000-15 , 2000-12 I.R.B. 826, identifying certain transactions as "listed transactions" for purposes of §1.6011-4T(b)(2) of the temporary Income Tax Regulations and §301.6111-2T(b)(2) of the temporary Procedure and Administration Regulations. This notice restates the list of transactions identified in Notice 2000-15 as "listed transactions" effective February 28, 2000 , and updates the list by adding transactions identified in notices released subsequent to February 28, 2000.
Tax Shelter Prop - TD 9017
Tax Shelter Props. Regs.- The IRS has published temporary regulations (T.D. 9017) that revise the categories of transactions that must be disclosed on returns under temporary reg. section 1.6011-4T.
Part III - Administrative, Procedural, and Miscellaneous Certain Reinsurance Arrangements Notice 2002-70
  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.
Internal Revenue Bulletin: 2003-45 November 10, 2003
  In this publication, the IRS announced that it will now consider ruling requests on the tax treatment of captives.
IRS Revenue Ruling 2002-89
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."
IRS Revenue Ruling 2002-90
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."
IRS Revenue Ruling 2002-91
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."
Insurance Loophole Helps Rich
Tiny Insurers Face Scrutiny As Tax Shields
Notice 2003-34
  Notice 2003-34 – Insurance definition – offshore entities in hedge funds.
Notice 2003-35
  Notice 2003-35- The purpose of this notice is to remind taxpayers that an entity must be an insurance company for federal income tax purposes in order to qualify as exempt from federal income tax as an organization described in 501 ( c ) (15).
Internal Revenue Service (I.R.S.) Revenue Ruling Insurance, Federal Income Tax Purposes
  In this pronouncement, the IRS discusses the qualifications of certain 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.
Notice 2005-49 Qualification of Certain Arrangements as Insurance
  Notice 2005-49 comments on additional guidance concerning the standards for determining whether an arrangement constitutes insurance for federal income tax purposes.
Section 23. Small Insurance Companies or Associations IRC 501(c)(15)
  IRS Manual on 501(c)(15) Insurance Companies.
Determination of Gross Receipts for Purposes of Section 501(c)(15)
  Notice 2006-42 comments on The Determination of Gross Receipts for Purposes of Section 501(c)(15).
Relief under 301.9100-3
  Relief under 301.9100-3 of the Procedure and Administrative Regulations granting an extension of time to file under election under section 831(b)(2))(A)(ii).”
Rev. Rul 2007-47 was issued buy the US Internal Revenue Service on July 23, 2007
  This ruling holds that an arrangement that provides for the reimbursement of inevitable future costs does not involve the requisite insurance risk for purposes of determining (i) whether the amount paid for the arrangement is deductible as an insurance premium.
IRS Issued Proposed Regulations
  IRS issued proposed regulations that provide guidance regarding the treatment of transactions involving obligations between members of a consolidated group and the treatment of transactions involving the provision of insurance between members of a consolidated group.
Internal Revenue Bulletin: 2008-5 February 4, 2008 Rev. Rul. 2008-8
  Revenue Rule 2008-8 explains how arrangements between an individual cell and its owner are analyzed for purposes of determining whether there is adequate risk shifting and risk distribution to constitute insurance.
IRS Revenue Ruling 2005-40
  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.
TAM 200816029 on Partnership Entities Counted For Risk Distribution Purposes
  TAM 200816029 on Partnership Entities Counted For Risk Distribution Purposes.
TAM 200827006
  TAM 200827006 - Ruling discusses whether a manufacturer’s original product warranty risks covered by the Reimbursement Policies purchased by Taxpayer constitute insurable risks for federal tax purposes.
September 2010 AFRs
  Applicable Federal Rates (AFR) for September 2010 - This revenue ruling provides various prescribed rates for federal income tax purposes for September 2010 (the current month).
 
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