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Avrahami Motion for Reconsideration: More From the Record

By Celia R. Clark, Esq. A brief comment is offered here about the Motion for Reconsideration, denied by the Order issued on November 14, 2017. (Both the Motion and the Order relate to Avrahami v. Commissioner, 149 T.C. No. 7, August 21, 2017, Docket Nos. 17594-13, 18274-13). Two grounds for reconsideration were argued in the Motion. The first one was that Feedback Insurance Company, Ltd. (“Feedback”) operated like an insurance company because it relied upon qualified advisors, even if they may have made errors. The Tax Court pointed out that there is no law supporting this argument. The second ground raised in the Motion is that the policies at issue were claims-made policies, not occurrence policies. The Court engages in a change of direction in responding to this point, referring to a particular policy that “was so ill-drafted that it was both a claims made and an occurrence policy.” The [...]

2017-12-24T17:06:09+00:00 December 11th, 2017|Uncategorized|

Terminating Captive Insurance

Clark & Gentry, P.L.L.C. is no longer providing captive insurance services, effective 12/31/17. We have contacted our clients about this, but if we somehow missed you, we will forward a complete copy of your file on request. We are available to assist you in liquidating an insurance company or in converting it to an investment company.

2017-11-14T17:13:05+00:00 November 14th, 2017|Uncategorized|

The Avrahami Record

By: Celia R. Clark, ,J.D., LL.M Some of the recent coverage of the Avrahami case (149 T.C. No. 7 (2017)) has made me - a fact witness in the case and a former attorney for the Avrahamis - wonder how many commentators are actually familiar with the case record. I. Government Reports No one seems to be aware that four U.S. Government reports are part of the trial record: One prepared by the President's Working Group on Financial Markets ("PWG"), chaired by the U.S. Secretary of the Treasury (September 2006), and one prepared by the U.S. Government Accountabiliy Office (December 2008)("GAO Report"). These t reports deal with various aspects of the terrorism risk insurance market in the U.S. The reports a.re thorough, analytical and supported by extensive data. (Two other Governmental reports were admitted into evidence - one by the Department of Homeland Security and one by the National Infrastructure [...]

2017-11-14T17:13:24+00:00 November 14th, 2017|Uncategorized|

More Developments on Micro-Captives

As of this writing, the taxpayers in the Avrahami case are planning to file both a Motion for Reconsideration (to correct factual errors) and an appeal to the Ninth Circuit Court of Appeals. Litigation counsel believes there are several grounds for appeal. Separately, Heritor Management is retaining an independent actuary to peer-review the actuarial model used by ACR Solutions Group for Clark & Gentry clients. The review will be completed in 2017. This will be the fourth review of ACR Solutions Group’s approach to modeling our clients’ risk. We expect only minor comments, as has been the case in the past. Heritor Management is also analyzing all policies drafted by Clark & Gentry and currently in effect to determine the diversity of risk insured by each. This information will lend additional support to the risk distribution achieved by Clark & Gentry clients, in the event it is challenged. We have [...]

2017-11-14T17:13:40+00:00 September 1st, 2017|Uncategorized|

Memo to All CIC Clients and Advisors

On Monday, August 21, 2017, the Tax Court issued its long-awaited decision in the case of Avrahami v. CIR. Mr. and Mrs. Avrahami are clients of Clark & Gentry, P.L.L.C., and the case has implications for our other CIC clients. Generally, the decision affects captive insurance companies that participated in risk pools operated by Pan American Reinsurance Group, Inc. during the period 2009-2011. As to these risk pools, the court held, in essence, that Pan American was not a bona fide insurance company, and that, therefore, the policies it was issuing were not insurance, which in turn, in the court’s view, means that the reinsurance by the underlying captive insurance company and those same policies did not distribute risk. The 105-page opinion discusses many other issues, including the taxpayers’ failure to get prior regulatory approval of loans. The court did not impose penalties except for some tangential matters. Clark & [...]

2017-11-14T17:14:19+00:00 August 24th, 2017|Uncategorized|