IRS Definition
Does having a captive insurance license automatically mean you’re an insurance company for US tax purposes?
No
Name one of the four attributes the IRS looks for in an insurance company.
Risk shifting, risk distribution, insurance risk, commonly accepted sense
What percentage of US ownership triggers CFC status for insurance companies?
25%
What does RPII stand for?
Related Person Insurance Income
Why do single-parent captives often fail the IRS insurance test?
Lack of risk shifting and risk distribution
What does the IRS focus on besides licensing?
How the company operates and manages risk
What is risk distribution in simple terms?
Spreading risk across multiple exposures or insureds
Who counts as a US shareholder?
US citizen/resident, domestic corporation, partnership, estate/trust
What happens if a captive earns RPII?
US tax is due immediately, even if income stays offshore
Are group captives more likely to trigger RPII?
Yes