IRS Revenue Rulings, Etc.

IRS Revenue Rulings, Revenue Procedures, and Notices

A Captive Insurance Company should make both economic and business sense. A Captive 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 captive insurance companies).

Revenue Ruling 2001-31

IRS Gives Up on “Economic Family Theory”

Revenue Procedure 2002-75

Private Letter Rulings on Insurance Co. Issues

Revenue Ruling 2002-89

50% Third Party Insurance Risk

Revenue Ruling 2002-90

12 Brother / Sister Subsidiary Requirement

Revenue Ruling 2002-91

Spreading of Risk in Captive Group

Notice 2003-34

Use of Insurance Companies / Hedge Funds

Revenue Ruling 2005-40

Tax deduction not applicable if entity is “sole client” of Captive

Notice 2005-49 (18 KB)

IRS asks for comments on qualification of certain arrangements as insurance.

Notice 2005-49 — CICA Comments (414 KB)

The Captive Insurance Company Association’s comments on IRS notice 2005-49