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William Byrnes (Texas A&M) tax & compliance articles

Group Captive Insurance Companies and Year End Tax Considerations

Posted by William Byrnes on November 30, 2010

Assorted international currency notes.

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As we have discussed in previous blogticles, captive insurance can be a viable method to more efficiently protect against certain risks under various circumstances.  For discussion on these topics please see our blogticles on AdvisorFYI from the week of August 30th, Monday through Wednesday, Alternative Risk Transfer BasicsRisk and Self-Insurance, andCaptive Insurance Company Introduction.

In addition, we have discussed in previous blogticles the ability to deduct prepaid expenses for certain items, both from an accrual basis and cash receipts and disbursements method taxpayer approach.  One such class of deductions that is generally allowable is, “insurance premiums against fire, storm, theft, accident, or other similar losses in the case of a business, and rental for the use of business property.”

See generally our blogticles from November entitled, Year End Tax Planning: Pre-Paid Insurance Expense For Accrual Accounting Taxpayers, and Year End Tax Planning: Pre-Paid Expenses For Cash Accounting Taxpayers.

Read this entire set of articles starting at AdvisorFYI.

One Response to “Group Captive Insurance Companies and Year End Tax Considerations”

  1. I’m a big fan…. The way I see it is that captives are created primarily to insure against loss by a parent company or group and a host of other secondary benefits – it’s just a matter of by whom, how, and to what degree those benefits are shared.

    And, traditional insurance companies face new and onerous regulatory restrictions with respect to capitalization, solvency margins and investment constraints. Captives, however, face a much more relaxed regulatory environment.


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