The Internal Revenue Service last week announced it had withdrawn a proposed regulation that, if enacted, could have driven captive insurance formations offshore, self-insurance experts had warned.
The action followed intense lobbying of Treasury Department officials and members of Congress, as well as an onslaught of taxpayer comments sought by the IRS by Dec. 27, 2007.
The regulation--1.1502-13(e), proposed on Sept. 28, 2007--would have eliminated the tax deduction for reserves established by captive insurers for insurance sold to affiliates, if the insureds and insurer file in the same consolidated return.
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