IRS Eyeing ‘Next Generation’ of Micro-Captive Insurance Deals

Nov. 20, 2020, 4:35 PM

The IRS is paying close attention to the evolution of transactions involving small insurance companies that the agency views as tax shelters, according to a top official.

The agency is tracking the emergence of “next generation” micro-captives that don’t involve tax code Section 831(b), IRS Chief Counsel Michael Desmond said at a conference Friday. Micro-captives are traditionally small insurance companies that qualify under tax code Section 831(b) to choose to pay tax only on their investment income and not their underwriting income.

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