Thank you for choosing Oxford Risk Management Group to aid in the preparation of Form 8886.
IMPORTANT INFORMATION
Reporting is required if the Insured, one or more Owners of the Insured, and/or persons related to them, collectively “own” (directly or indirectly) 20% or more (vote or value) of the Captive.
There are three concepts to keep in mind: (1) direct ownership; (2) indirect ownership; and (3) ownership through a related party. The meaning of these concepts is very important and should be interpreted broadly.
Direct and Indirect Ownership Concepts
Direct and indirect ownership concepts may apply BOTH in determining whether a person is an “Owner” of an Insured AND in determining whether the Owners and/or the Insured collectively own 20% or more of the Captive. The 20% threshold may be met either on the basis of voting control or total value of the Captive (which may be different if the Captive has different classes of stock).
Obviously, a person or entity owns an Insured or the Captive if the person or entity directly holds shares (vote or value) or other ownership interests in his/her or its own name.
A person or entity indirectly owns the Insured or the Captive if the person or entity holds shares (vote or value) of the Insured or the Captive though another entity, such as a C corporation, S corporation, Trust, Limited Liability Company, or Partnership. The ownership amount is the proportion of their ownership interest(s) in the intermediary entity or entities.
Related Party Concepts
After identifying the (direct or indirect) Owners of the Insured, it is necessary to determine whether a person is *related* to the Insured or one of its “Owners.” Any such related persons’ ownership interests in the Captive are counted toward the 20% threshold.
An individual is related to an individual Owner if he or she is a family member (“family” for this purpose including siblings, spouses, and direct ancestors and descendants).
An entity is related to the Insured, or to an Owner of the Insured, if there is sufficient overlapping ownership among the parties. In certain cases, this rule may reach widely. For example, the stockholdings of two otherwise unrelated shareholders who are both members in another partnership may be combined in determining whether there exists a sufficient level of overlapping ownership in a corporation.
Please contact your tax advisor if you have questions about how these rules operate in your situation.
INSTRUCTIONS
Step 1:
Download the Excel Intake Form below.
Step 2:
Open the Excel Intake Form; if Excel opens in Protected View, select Enable Editing.
Step 3:
Save the Excel Intake Form by Selecting File –> Save As –> Select a location on your local computer where you can find it.
Step 4:
Open Excel Intake Form saved to your local computer.
Step 5:
Complete the worksheet titled Insured(s) or Insured Owner(s).
Step 6:
Complete ALL information highlighted in yellow accurately and completely.
Step 7:
When the form is complete, Save the Excel to Save the information.
Step 8:
Open an email to attach the Excel Intake Form to and send to Client@OxfordRMG.com.
Step 9:
Attach the Completed Excel Intake Form to the email.
Step 10:
Send to Client@OxfordRMG.com.
It is critical that you complete the intake form accurately and in its entirety. Oxford Risk Management Group solely relies on the information provided by you to complete the form.
How many forms must be filed? A separate Form 8886 must be filed for each Captive, Insured entity and their Owners who have participated in 831(b) captive arrangements. For example, assume an Oxford client with 1 captive insurance company, issuing insurance to 1 operating entity which has 2 owners. This client must file 4 disclosure forms.
Please click here to download the Client Intake Forms.
Oxford Risk Management Group and related entities do not provide tax or legal advice and do not authorize any agents or employees to provide such advice. The U.S. income tax deductibility of premiums, and other tax compliance and disclosure reporting requirements, may vary on a case-by-case basis. All questions of a tax or legal nature should be directed to your independent legal or tax advisors.