US Tax Court permits deductions for premiums in captive insurance arrangement

The US Tax Court in Securitas Holdings Inc. v. Comm., released October 29, has ruled that payments made under a brother-sister captive insurance arrangement were deductible insurance premiums because the requirement of risk shifting was met, the arrangement distributed risks by insuring a large pool of different risks, and the arrangement constituted insurance in the commonly accepted sense. See, Securitas Holdings Inc. and subsidiaries v. Commissioner.