Showing posts with label IRS audits. Show all posts
Showing posts with label IRS audits. Show all posts
The benefits of captive insurance companies
For many years, large corporations in this country have enjoyed many benefits from operating their own captive insurance companies. Most were established to provide coverage where insurance was unavailable or unreasonably priced. These insurance subsidiaries or affiliates were often domiciled offshore, especially in Bermuda or the Cayman Islands. The risk management benefits of these captives were primary, but their tax advantages were also important.
In recent years, smaller, closely held businesses have also learned that the captive insurance entities can provide them significant benefits. These include the attractive risk management elements long appreciated by the larger companies, as well as some attractive tax planning opportunities. A properly structured and managed captive insurance company could provide the following tax and nontax benefits:
- Tax deduction for the parent company for the insurance premium paid to the captive;
- Various other tax savings opportunities, including gift and estate tax savings for the shareholders and income tax savings for both the captive and the parent;
- Opportunity to accumulate wealth in a tax-favored vehicle;
- Distributions to captive owners at favorable income tax rates;
- Asset protection from the claims of business and personal creditors;
- Reduction in the amount of insurance premiums presently paid by the operating company;
- Access to the lower-cost reinsurance market; and
- Insuring risks that would otherwise be uninsurable.
IRS tax relief firm, Lance Wallach, speaking: If you want to get sued, don't follow this advice
IRS tax relief firm, Lance Wallach, speaking: If you want to get sued, don't follow this advice: If you want to get sued, don't follow this advice
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