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The Lingering Demise Of Tax Exempt Mutual And Captive Insurance Companies, Darryll K. Jones

Journal Publications

Prior to the enactment of IRC §501(m), the issue of whether a group self-insurance pool was tax exempt generally depended upon an analysis of the "substantial purpose" requirement contained in Treasury Regulation §1.501(c)(3)-1(c)(1) which denies tax exempt status to an entity or organization if "more than an insubstantial part of its activities is not in furtherance of an exempt purpose." In addition, Treas. Reg. §1.501(c)(3)-1(e)(1) allows an entity to operate a trade or business as a substantial part of its activities but only "if the operation of such trade or business is in furtherance of the organization's exempt purpose.... Thus, …