Barbara T. Kaplan and Josh Prywes, of Greenberg Traurig LLP, have made available for download their article, “IRS Wins Again on Micro-Captive Arrangements, Urges Taxpayers to Exit Transactions,” published in a Greenberg Traurig Alert. The abstract is as follows:
On April 9, 2021, the IRS urged taxpayers who engage in micro-captive insurance arrangements to exit these transactions. This announcement follows an IRS victory in the U.S. Tax Court, which found that such arrangements are not eligible for the tax benefits claimed. The IRS had previously issued settlement initiatives following victories in Tax Court…
The IRS announced it will disallow tax benefits from transactions that are determined to be abusive, and it may also require domestic captives to include premium payments in income and assert a withholding liability on foreign captives. IRS Commissioner Chuck Rettig agreed with court characterizations of micro-captive transactions as “fanciful” and “unreasonable.”
Posted by Bella Hoang, Managing Associate Editor, Wealth Strategies Journal.