Taxation of Captives

Annual Taxes on Premiums ("Premium Tax")

Kentucky Premium Tax Rate

The Premium Tax rate for Kentucky 831(b) small captives caps out at $5,000 annually, or 0.4% (for annual premiums collected by the captive below $1.0 million):

Millions of Dollars                Direct Premiums Tax Rate (%)

0-20                                    0.40

20-40                                  0.30

40-60                                  0.20

60+                                     0.075

State, Federal, Gift, Estate and Other Taxes

For a discussion of federal and state income tax issues, see Captive Formation:  Practical Issues

Taxation of Captives

See Estate and Business Planning for the following:

Ownership by or in Trust for Children or Grandchildren

Family Limited Partnerships or LLCs

Ownership by Key Management

See Gift, Estate and GST Tax Issues for the following:

Premium Deductible

Gift Tax

See Estate- and Generation Skipping-Tax

Estate Tax

Generation Skipping Tax