Washington–The Internal Revenue Service said it plans to make it a priority this year to develop guidance for small farm mutual insurers concerning a tax exemption recently altered by legislation.
The clarification relates to the tax exemption for small “farm mutual” property and casualty insurance companies, which have traditionally been formed by groups of farmers to provide coverage for their properties.
In recent years, however, some investment companies have sought to take advantage of the exemption by forming a company and writing a minimal amount of coverage while keeping an exceedingly high capital and surplus investment income within the company.
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