Overview of Federal Tax Considerations
Tax considerations for the captive • Accelerated timing for loss deductions; deductions permitted when loss is incurred, which does not require discovery or receipt of claim (i.e. incurred but not reported losses (“IBNR”) and claim payment case reserves (exceptions from the all events test) • Deferral of 80% of collected but unearned premium reserve • May be formed as domestic or off-shore (foreign) company. If offshore, may elect to be treated as a US company for tax purposes • Under the consolidated group regulations an insurance company’s intercompany transactions are respected (e.g. not eliminated) upon consolidation. Treas. Reg. § 1.1502-13.
AEC EXECUTIVE ROUNDTABLE
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