Captive Insurance Company Premium Loan Backs: Proper Investment or Improper Return of Capital?

Captive Visions, 2015

3 Pages Posted: 18 Aug 2018

See all articles by Beckett G. Cantley

Beckett G. Cantley

Northeastern University

Bruce Luna

Atlanta's John Marshall Law School

Date Written: July 1, 2015

Abstract

Over the last decade, the use of Captive Insurance Companies ("CIC") has expanded from large entities to smaller, closely held companies when utilize the IRC 831(b) election. Correspondingly, the IRS has expanded its review of CIC arrangements, specifically targeting those CIC arrangements that utilize the IRC 831(b) elections for tax shelter reasons. To date, the vast bulk of IRS audits have focussed on the type of insurance provided by a CIC to its insured. In the future, additional IRS investigations may focus on the final transactions between the CIC and its respective owner, specifically circular cash flows created by premium loan backs from the CIC to the CIC owner.

Suggested Citation

Cantley, Beckett Gordon and Luna, Bruce, Captive Insurance Company Premium Loan Backs: Proper Investment or Improper Return of Capital? (July 1, 2015). Captive Visions, 2015. Available at SSRN: https://ssrn.com/abstract=3226456

Beckett Gordon Cantley (Contact Author)

Northeastern University ( email )

4471 Dean Martin Dr. #3708
Las Vegas, NV 89103
United States
702-881-4849 (Phone)

Bruce Luna

Atlanta's John Marshall Law School ( email )

1422 W. Peachtree Street, N.W.
Atlanta, GA 30309
United States

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