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Payments for future remediation expenses are not insurance premiums.

Publication: The Tax Adviser
Publication Date: 01-OCT-07
Format: Online
Delivery: Immediate Online Access

Article Excerpt
The IRS ruled in Rev. Rul. 2007-47 that payments to an insurance company to cover future capped costs were not insurance payments for tax purposes. The "premium" was an amount equal to the present value of estimated future remediation costs required by the government.

The taxpayer in the ruling is an accrual-method domestic corporation (X) that conducts a business that is inherently harmful to people and property. X is required by government regulation to remediate that harm. X will...

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