Captive Insurance Premium Deductions Sunk After Doctor’s Appeal

The physician owner of Texas MedClinic isn’t entitled to premium deductions for captive insurance that the federal government claimed he arranged as a scheme to avoid taxes, the Fifth Circuit ruled Wednesday.

Bernard Swift asked the US Court of Appeals for the Fifth Circuit to reverse a ruling that his captive arrangement can’t be considered bona fide insurance for tax purposes because the captives lacked liquidity and failed to distribute risk. The doctor sued after the IRS disallowed more than $1 million in deductions for insurance premiums and legal fees.

Swift argued the decision relied on an unfair standard of ...