Are Micro-Captives Legal? What the IRS Actually Targets
Yes — captive insurance is a long-established, legitimate tool. What the IRS targets is abusive arrangements that aren’t real insurance. Here’s the line.
Insights
Captive insurance, thought through.
Notes and explainers on captive insurance — what the structures are, who they fit, and how to build them as genuine insurance rather than a tax result. Written for business owners and the advisors who counsel them.
Browse by topic
- Fundamentals 14 posts Plain-English explainers on captive insurance — the concepts that apply whether you are weighing a single-owner micro-captive or a member-owned group captive.
- Micro-Captives (831(b)) 2 posts Single-owner captives and the Section 831(b) election — how they work, who they fit, and how to build them as genuine insurance.
- Group Captives 2 posts Member-owned group captives — pooling and distributing risk across unrelated businesses, and the discipline that keeps a pool sound.
Latest
-
-
Captive Insurance and Taxes: What’s Real, What’s Hype, and What the IRS Penalizes
How captive insurance taxation actually works, the promoter pitches that get people penalized, and why the tax election follows the insurance.
-
Captive Insurance Dividends and Distributions: How Money Actually Comes Back to Owners
How value returns from a captive — underwriting profit and investment income, claims first, and distributions that are conditional and regulator-approved.
-
Captive Insurance for CPAs and Financial Advisors: A Plain-English Primer
A plain-English primer on captive insurance for CPAs, attorneys, and advisors: what a captive is, the two structures, and how to spot a fit.
-
Captive Insurance vs. Self-Insurance vs. Traditional Coverage
A side-by-side comparison of traditional commercial coverage, self-insurance, and a captive you own — on control, cost behavior, risk, and fit.
-
How Does Captive Insurance Work? A CFO’s Guide
A plain-English guide for finance leaders: how a captive insurer you own actually works, why it must be real insurance, and the total-cost-of-risk lens.
