Law360 covered a U.S. Tax Court's ruling that expanded its view on captive insurers by allowing Rent-A-Center Inc. to deduct payments made to its Bermuda-based insurance subsidiary Legacy Insurance Co. Ltd. In a split decision, the Tax Court found that deductions were permitted because Legacy shifted risk from the company's numerous subsidiaries.
"Federal income tax consequences were considered, but the formation of Legacy was not a tax-driven transaction," the majority opinion said. "To the contrary, in forming Legacy, petitioner made a business decision premised on the myriad of significant and legitimate nontax considerations."
Rent-A-Center is represented by Gardere Tax Attorneys Val J. Albright and Brent C. Gardner.
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