This page and the subpages part hereof or linked to it lay out nearly every significant tax related issue in language anyone can understand if they take the time to read all this material.
The major US tax issues impacting the formation and operation of a captive insurance company are summarized as follows:
Is your captive designed correctly to meet the IRS requirements for insurance companies, most notably the IRC section 831 elements? Does it meet the definition of an insurance company and the IRS safe harbor rulings on risk distribution and shifting? Does your captive and its business relationship to affiliated insured companies meet the new Economic Substance test part of the 2010 Affordable Care Act? Will your captive design, operations, loans and dividend practices cause exposure to 26 U.S.C. section 482 re-allocation of income and deductions among controlled entities? Are the premiums paid by affiliated insured operating companies reasonable and necessary and fully deductible under IRC sections 162 and 482? If the IRC section 831(b) election making the captive premium income free of US income taxation is important, has it been made correctly and its requirements satisfied? If IRC section 501(c) (15) is being relied upon, does your captive design meet the requirements for its income to be exempt from tax? If you elected to form an offshore captive, does it qualify for and have you properly made the 953(d) election to have the captive taxed as a US company? What are the concerns and penalties if your offshore captive blows its 953(d) election either by not making it correctly or it being disqualified? Does the FATCA (Foreign Account Tax Compliance Act) part of HIRE (2010 Hiring Incentives to Restore Employment) require your captive file the new form W-8BEN or other forms, and is it exempt from withholding? Have you designed the ownership of your captive correctly to minimize gift and estate taxes? How can you operate and wind-up your captive to minimize income taxes? How does domicile selection impact tax obligations and exposures of the captive
Homemation and maintenance of the captive insurance company
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ReplyDeleteThis page and the subpages part hereof or linked to it lay out nearly every significant tax related issue in language anyone can understand if they take the time to read all this material.
The major US tax issues impacting the formation and operation of a captive insurance company are summarized as follows:
Is your captive designed correctly to meet the IRS requirements for insurance companies, most notably the IRC section 831 elements?
Does it meet the definition of an insurance company and the IRS safe harbor rulings on risk distribution and shifting?
Does your captive and its business relationship to affiliated insured companies meet the new Economic Substance test part of the 2010 Affordable Care Act?
Will your captive design, operations, loans and dividend practices cause exposure to 26 U.S.C. section 482 re-allocation of income and deductions among controlled entities?
Are the premiums paid by affiliated insured operating companies reasonable and necessary and fully deductible under IRC sections 162 and 482?
If the IRC section 831(b) election making the captive premium income free of US income taxation is important, has it been made correctly and its requirements satisfied?
If IRC section 501(c) (15) is being relied upon, does your captive design meet the requirements for its income to be exempt from tax?
If you elected to form an offshore captive, does it qualify for and have you properly made the 953(d) election to have the captive taxed as a US company?
What are the concerns and penalties if your offshore captive blows its 953(d) election either by not making it correctly or it being disqualified?
Does the FATCA (Foreign Account Tax Compliance Act) part of HIRE (2010 Hiring Incentives to Restore Employment) require your captive file the new form W-8BEN or other forms, and is it exempt from withholding?
Have you designed the ownership of your captive correctly to minimize gift and estate taxes?
How can you operate and wind-up your captive to minimize income taxes?
How does domicile selection impact tax obligations and exposures of the captive