What is a micro-captive?
There is a provision in the code, Section 831(b), that allows certain insurance companies with premiums under a certain threshold to not pay tax on their insurance premiums. They have an exemption on their income for those insurance premiums and then they pay tax just on the earnings in the insurance company. This has resulted in somewhat of a cottage industry that has been setting up micro-captive insurance companies basically for privately held businesses. The kinds of insurance that they create through these arrangements are called enterprise risks. This video reviews the IRS’s view of these companies and provides case law examples.
Runtime: 17 minutes
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