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Rent-A-Center, Inc. v. Commissioner

Court rules that captive is an insurance company for tax purposes


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On January 14, 2014, the Tax Court decided Rent-A-Center, Inc. and Affiliated Subsidiaries 
v. Commissioner, 142 T.C. No. 1 (2014) ("RAC Case" or the "Case"), involving a captive insurance arrangement that was challenged by the Internal Revenue Service. The Tax Court found a parental agreement between a captive and its parent could be present in a valid insurance arrangement for federal income tax purposes. The Case also dealt with the manner in which risk distribution is measured in determining the existence of insurance. The taxpayer in the RAC Case was a Texas resident and the case was heard in Texas.

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