The adoption of captive insurance arrangements is on the rise, with middle market business owners realizing both their risk management and planning benefits — but ambiguity and controversy has kept some business owners and their advisers at bay.
In early 2015, the Internal Revenue Service placed captives on its “dirty dozen” list of abusive tax schemes.
This decision arose out of unscrupulous practices set forth by rogue captive managers who led their clients astray by handling the clerical and administrative duties of captive formation, but doing little in the way of verifying whether businesses had bona fide risks.
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