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Captive Structure
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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 tax payer. |
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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 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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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 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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| Tax Shelter Disclosure Regulations. |
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These regulations were first published 3/2/00 as temporary regulations requiring corporate taxpayers 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 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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Fax: 713/850-8530