The Internal Revenue Service recently issued a long-awaited answer to the debated question–"Who counts as an insured?"–in two captive insurance arrangements.
The IRS declared that in a limited partnership, the general partner is the insured, while in a multimember limited liability company, the LLC is the insured. If there is more than one general partner, each is an insured.
Notwithstanding that the document (TAM–Technical Advice Memorandum–200816029) may not be cited as precedent, this clarity will assist both the IRS and taxpayers in determining if a policy is "insurance" for federal income tax purposes.
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