Captive insurance companies are no longer the domain of Fortune 500 Companies. During 2002, the IRS published safe harbors making captives more economically viable, which has led to a proliferation of 3,000 plus captives taking the 831(b) Small Property and Casualty Election. Due to the popularity of these smaller captives (“micro-captives”), regulatory scrutiny by the IRS and domicile regulators has increased. This course will introduce CPAs and other advisors to the captive industry, specifically micro-captives. The risk management and tax benefits of micro-captives will be addressed; however, the emphasis of the course will be regarding how to conservatively structure and operate a micro-captive. Recent District Court rulings on insurance companies will serve as case studies and provide current insight as to what regulators seek in a compliant micro-captive program.
Is the proposed establishment of the Micro-Captive Insurance Company for risk management or tax purposes?
How are premiums on uninsured risks determined? Does the Captive Management Firm use an insurance industries’ risk/premium analytical software? Ask to look at an illustration of a feasibility report for premiums on uninsured risks. This is imperative! This is the heart of the “Business Purpose” relative to IRS Code Sec 162.
Is the risk sharing pool legitimately priced?
How to invest like a real insurance company and setting proper distribution expectations.
Determine which of your clients will benefit with a captive insurance company.
Howard Hugh Potter, JD, MBA, CPA, has been involved in providing insurance, tax, and financial strategies for public and closely held businesses utilizing captive insurances companies since 2001. He focuses on business development and subject expertise with CPA & law firms, insurance agencies, and financial planning & wealth management firms through affiliations as an independent contractor with captive management firms. Mr. Potter received his Juris Doctorate and Bachelor of Science of Business Administration from Creighton University and his Masters of Business Administration from the University of Nebraska. Mr. Potter was staff accountant at Peat, Marwick and Mitchell in Omaha, Nebraska and Senior Accountant in the Tax Department at Touche Ross Company in Denver, Colorado. As partner in the law firm of Vaughan and Potter, he worked in the areas of tax, legal, and financial consulting involving oil and gas investments, equipment leasing, and the marketing of tax advantaged investments. He was co-founder, principal, and national sales manager of Denver Securities Corporation, a NASD securities firm and was responsible for developing a national sales team, sales material and presentations that marketed through law firms, CPAs and the brokers/dealer community. After retiring from the law firm he served as President and CEO of CareerLab, Inc. a human capital management firm and a member of Lincolnshire International with 17 offices in North America. Mr. Potter also served on the Board of Lincolnshire and as Treasurer. Mr. Potter is an inactive member of the American Bar Association, Colorado Bar Association, Nebraska Bar Association, Colorado Society of Certified Public Accountants and the American Institute of Certified Public Accountants. He holds current licenses with the Colorado Division of Insurance for property & causality and life. Mr. Potter is a former member of the Union League Club of New York and served as a Member of the Board of Trustee for Colorado Academy, Denver, Colorado. He is a lifetime member of the National Rifle Association. Mr. Potter currently serves on three Boards: the Colorado Board of Directors of the Association for Corporate Growth and the Colorado Board of Directors of the Financial Executives International. He was awarded the Denver Association for Corporate Growth Chapter’s 2010 Outstanding Member of the Year Award. Mr. Potter also serves as a Board member for Spirit of the Sun, a 501(c)3 non-profit organization which focuses on strengthening and improving the economic and cultural well-being for Native American communities. He has hosted the Annual Investment & Financial Cross-Networking Event held at the University of Denver since 2006, with a sellout of 400 plus attendees. Mr. Potter grew up on a cattle and horse ranch on the Rosebud Sioux Indian Reservation in South Dakota and is a 4th generation enrolled member of the Rosebud Sioux Tribe. His children, Kristin, Kara and Brandon are also enrolled members of the Rosebud Sioux Tribe as are his three grandchildren, Kendall, Ben, and Russell. He and his wife, Marcia, enjoy visiting their children and grandchildren in Aspen, CO and Santa Fe, NM. Their mutual passions are family, music, and the outdoors.