As an expert witness Lance Wallach side has never lost a case!
Specialize in 419 plans,412i plans, captive insurance plans, welfare benefit plans, section 79 plans
Two recent captive insurance educational opportunities collectively provided participants with some excellent insights on best practices for captives formed for risk management purposes that seek 831(b) tax status and how the Internal Revenue Service (IRS) is attacking what it believes is abusive use of an 831(b) tax structure.“Captive Insurance Best Practices and the Defense of IRS Attacks” was presented November 11, 2015, at the Delaware Captive Insurance Association (DCIA) 2015 Fall Forum. On November 17, 2015, the American Bar Association (ABA) Captive Insurance Committee hosted a webinar on the pending Avrahami v. Commissioner US Tax Court case.In their DCIA Fall Forum presentation, alliantgroup's Steven Miller, national director of tax, and John Dies, managing director of tax controversy, stressed the importance of documenting the reasons why the captive was formed for risk management purposes and having a formal business plan and an independent actuarial study. One of the most important IRS tests they outlined was whether the 831(b) captive operates like an insurance company. Is it organized, operated, and regulated as an insurance company by the state in which it does business?Is it adequately capitalized in a manner that meets the minimum captive requirements of the domicile and to pay losses?Do policies take the form of insurance and contain standard insurance provisions?Does the captive insured have an insurable interest in the covered asset?Are the premiums reasonable in relation to the risk of loss, determined through an actuarial study and at arm’s length?Are premiums paid?Are claims processed and paid when losses occur?