831 B Captives
The qualifications for forming an 831(b) captive insurance company include:
• Owning a closely-held, profitable business
• Insurable risk exposures inside the business
• Pre-tax profits of at least $1 million per year
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MSI knows 831b Captives like no other Captive Manager. 831Bs enable small to mid-sized companies to enjoy the benefits of owning an Insurance Company. Due to our structure, companies with as little as $1 Million in gross revenues can enjoy captive benefits which far exceed costs.
An 831(b) effectively allows a small insurance company to receive up to $2.3 million per year in premiums, without paying any income taxes on those premiums.
The 831(b) election does not affect — at all — the deductibility of the premiums paid by the operating business to the Captive. Premiums are otherwise deductible; they may be deducted by the operating business just like any premium payments to a Captive.
This has the effect of creating an up to $2.3 million deduction in the operating business, with the premium moneys transferred to the Captive, and with the Captive not paying any income taxes on the receipt of those premiums.