A microcaptive insurance company that takes prepaid, tax-deductible premiums up to the Section 831(b)(2)(A)(ii), $1.2 million limit (and pays no tax thereon), writes “claims made” policies taking effect only after the claims period has expired, covers over $1 million above the ten-year moving average claims, and pays what claims the insured tells them to pay (whether or not the policy is in effect)…that’s my kind of insurance company.

Alas, I don’t have one. But Caylor Land & Development, Inc., et al., 2021 T. C. Memo. 30, filed 3/10/21, based upon a country club pitch from a micromanager, started one. Wherefore, the wish I expressed back on 4/26/16 (see my blogpost “I Wanna Testify,” 4/26/16), namely and to wit, “I’m glad there’s going to be a trial, so I get more blogfodder.” Waited a long time, but here it is.

The Caylor family built up a major construction company in the wild west, and ran it accordingly, writing off family chats around the breakfast table as seven-figure “consulting fees,” and sending said fees to their various controlleds (about a dozen). The controlleds off-loaded same to the microcaptive.

It’s a replay of Avrahami. For that story, see my blogpost “The Selfies – Eclipsed,” 8/21/17. And Ben’s & Orna’s deal gets a good workout in the retelling, as Judge Mark V Holmes sends off the Caylors.

It’s a great try at a dodge, but it isn’t insurance as commonly understood.

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