The IRS acted within its authority when issuing a reporting regulation identifying some micro-captive insurance arrangements as tax abusive, a federal judge in Tennessee held, rejecting a challenge to the rule.
Judge Travis R. McDonough of the US District Court for the Eastern District of Tennessee said Thursday that the IRS final rule issued in early 2025 wasn’t arbitrary and capricious because the agency provided a “reasonably discerned” path for its decision to issue the rule.
Business owners generally form captive insurance companies to insure risks related to their own businesses, such as casualty or property losses, especially where those ...