Friday, September 10, 2021
Benjamin Alarie & Bettina Xue Griffin (Blue J Legal), Captive Insurance Appeal in Reserve Mechanical Will Likely Fail, 172 Tax Notes Fed. 1431 (Aug. 30, 2021):
In this article, Alarie and Griffin examine the Tax Court’s decision in Reserve Mechanical [T.C. Memo. 2018-86] and the strength of its appeal on the issue of whether the taxpayer was exempt from tax as a valid insurance company under section 501(c)(15).
Blue J predicts with 77 percent confidence that Reserve’s appeal will be dismissed by the Tenth Circuit.
Reserve obtained leave from the court to file a supplemental brief after oral arguments concluded that may contain documentary evidence that could potentially be persuasive for the court. The Blue J prediction reported here is limited to the Tax Court’s findings of fact, the positions of the parties in their briefs before oral argument, and their oral arguments.
This article has explained how the Blue J Tax machine-learning model can identify novel patterns and insights on the likelihood of establishing an insurance arrangement using case law. Machine-learning algorithms are well equipped to identify the patterns from past decisions and identify the most salient considerations when courts are assessing whether a taxpayer has crossed that line from legitimate tax planning to unsuccessful tax avoidance.
Prior TaxProf Blog coverage: