Insurance
Nov. 11, 2016
IRS to increase scrutiny of 'micro captive' insurance companies
Last week, the IRS increased the pressure on these entities, labeling virtually all micro captives as "Transactions of Interest." By Bruce Givner and Owen Kaye
Premiums are taxable income to most insurance companies. However, in 1986 Congress added Section 831(b) to the Internal Revenue Code, a tax incentive for small property and casualty insurance companies. It allows a P&C company to elect to not pay tax on its premium income if the premiums do not exceed $1.2 million. (On Jan. 1, this limit increases to $2.2 million.)
Typically Mom and Dad, who own a closely hel...
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