The captive community was positively giddy with today's news that the Internal Revenue Service had second thoughts about withdrawing the critical deduction such entities enjoy on reserves for insurance sold to affiliated clients, and rightfully so. After all, it was their intense lobbying and aggressive feedback that persuaded the IRS to back off rather than risk driving the thriving U.S. captive industry offshore.


While Uncle Sam might one day revisit the issue–the tax man warned that the IRS and the Treasury Department continue to study whether revisions to the rules for inter-company transactions are necessary to clearly reflect the taxable income of consolidated groups–for today at least, it's party time for the domestic captive industry.

(For full coverage of the IRS decision and reaction to it, click here.)

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