IRS Revenue Rulings, Revenue Procedures, and Notices
A private insurance company (PIC) should make both economic and business sense. A PIC needs to follow the traditional notions of insurance: it must be licensed, capitalized, and it must carry out its operations in a manner similar to a traditional insurance company.
The IRS has issued multiple Revenue Rulings, Procedures, Notices and Bulletins addressing various issues associated with the use of closely held insurance companies (such as private insurance companies).
IRS Gives Up on “Economic Family Theory”
Private Letter Rulings on Insurance Co. Issues
50% Third Party Insurance Risk
12 Brother / Sister Subsidiary Requirement
Spreading of Risk in Captive Group
Use of Insurance Companies / Hedge Funds
Tax deduction not applicable if entity is “sole client” of PIC
IRS asks for comments on qualification of certain arrangements as insurance.
The Captive Insurance Company Association’s comments on IRS notice 2005-49