Tax Court Follows Avrahami Analysis in Reserve Mechanical Decision

The US Tax Court issued its decision in Avrahami v. Comm’r of Internal Revenue, No. 17594-13, the earliest Tax Court opinion involving a micro-captive. On June 18, a second case has joined its ranks with the ruling in Reserve Mechanical v. Comm’r of Internal Revenue, No. 14545-16.

While it involved a small insurance company and whether it qualified under Internal Revenue Code section 501(c)(15),Reserve Mechanical provided additional information about the Tax Court’s views on captives and what the court considers insurance in that context. Captive insurance owners and managers should note that even though the taxpayer’s facts in both cases were slightly different, the Court’s underlying analysis of the issues remained similar.

Click here to read the full article detailing the case.

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