Overview
US Tax Court Invalidates Micro-Captive Arrangement: In Avrahami v. Commissioner, a tax court opinion issued today, the court held that taxpayers who used a “micro-captive” arrangement to protect a jewelry store business from terrorist attack cannot claim deductions for amounts paid to their captive insurance company. The court invalidated the use of I.R.C. §§ 831(b) and 953(d) elections to be treated as a small insurance company and domestic corporation.
IRS Sets Affordable Care Act Bronze Plan Premium Amounts for Calculating 2017 Tax Penalty: Today, the IRS released Revenue Procedure 2017-48, which set the Affordable Care Act (ACA) bronze plan premium amount used to calculate the maximum tax penalty for people who did not have the health care coverage required by I.R.C. § 5000A. Under I.R.C. §§ 5001A(b) – (c), the penalty is the lesser of: (1) the sum of the monthly penalty amounts, or (2) the sum of the monthly national average bronze plan premiums for the shared responsibility family. The Revenue Procedure 2017-48 sets the average premium for individuals covered by the bronze plan at $272 per month, and the maximum amount for households with five or more members at $1,360 per month.