In the matter of Securitas Holdings, Inc. v. Commissioner, T.C. Memo. 2014-225 issued today by the the
U.S. Tax Court, the Court found that Securitas had established a bona fide captive insurance arrangement among its U.S. companies and was entitled to
interest expense and premium deductions. As with all true insurance companies (which most captive arrangements are if done for business purposes), the captive arrangement shifted risks, distributed
risks, and constituted "insurance" in order to make the premiums deductible.
Indeed, if a captive insurance company is applicable to your holding company structures, the tax and premium benefits may be substantial. This Office is happy to answer any questions that you may have concerning captive insurance arrangements.
The opinion of the Court can be found at this link:
http://ustaxcourt.gov/InOpTodays/SecuritasHoldings,Inc.Memo.Buch.TCM.WPD.pdf
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