IRS officials are urging participants in abusive micro-captive insurance arrangements to exit the transactions as soon as possible.
On March 10, the U.S. Tax Court held in Caylor Land & Dev. vs. Commissioner that yet another micro-captive arrangement failed to qualify as insurance for federal tax purposes.
This decision follows several earlier Tax Court decisions that also confirmed the IRS' determinations that certain micro-captive arrangements were not eligible for the claimed federal tax benefits.
Taxpayers who engaged in abusive micro-captive transactions are once again encouraged to consult an independent tax advisor prior to filing their 2020 tax returns.