Tax Services for Property and Casualty Insurance

Our insurance client base includes domestic companies – domiciled in Georgia, Texas, Washington, D.C., - and foreign companies – domiciled in Turks and Caicos, Anguilla, and Grand Cayman.  PKM’s professionals have expertise in the areas of:

• Form 1120-PC Return Preparation
• State Premiums Tax Compliance
• Income Tax Accounting -  FAS109 / SSAP10
• Federal Tax Planning
• RS Practice and Procedure
• Audit Defense
• Estimated Tax Planning
• FIN 48 - both public and private GAAP filers must adopt
• Statutory accounting

Tax Services for Captive Insurance

PKM’s professionals have experience with captive structuring and compliance.   To have a valid arrangement, there are several factors to be considered.  The first is risk distribution.  In Rev. Rul. 2005-40, the IRS determined that certain risk-sharing arrangements do not constitute insurance – however, in some circumstances, the IRS considers risk distribution to be satisfied and classifies these associations as genuine insurance arrangements.  Similarly, in Rev. Rul. 2002-89, the IRS considers economic family – the issue of whether an arrangement between a sub and a parent is "insurance" for federal tax purposes.

PKM has experience with the following entities:

• Single parent/Pure Captives
• Group Captives(Industrial Insured/Association)
• Risk Retention Groups
• Core/Parent Reinsurance Arrangements

We also advise our clients on various methods of taxation.  Some areas of consideration for our insurance clients include:

• Section 831(b) - Election to be taxed on investment income only
  Insurance companies that have net written premiums of less than $1.2m for the taxable year may elect to have investment income taxed in lieu of taxable income.  Proper tax planning is necessary to determine the potential consequences of such an election.
  
• Section 953(d) - Election to treat foreign captive as US company
  Foreign companies meeting certain requirements can elect to be treated as a domestic corporation for tax purposes.  Again, the pros and cons of such an election must be examined carefully by tax professionals.

Industry Resources

PKM is actively involved with the Insurance Accounting and Systems Association (IASA) at both a local chapter and national level.  IASA’s goal is to enhance the knowledge of insurance professionals and others by facilitating the exchange of ideas and information.

PKM also has a history of involvement with the South Carolina Captive Insurance Association (SCCIA), promoting the formation and growth of captive insurance programs within the state of South Carolina.