Avrahami Ruling On Microcaptives Offers Little Guidance

Law360, New York (September 19, 2017, 5:09 PM EDT) -- On Aug. 21, the U.S. Tax Court released its long-awaited opinion in Avrahami v. Commissioner — the court's first ever section 831(b) decision. Over the past few years the U.S. Internal Revenue Service has ramped up its scrutiny of "microcaptives," as evidenced not only by a steadily increasing number of audits, but also by 1) the IRS' placing such arrangements on its annual "dirty dozen" list for each of the past three years, 2) classifying these arrangements as transactions of interest under Notice 2016-66 and 3) making microcaptives one of the first IRS large business division campaigns.

However, even with this...

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