The Protecting Americans from Tax Hikes (PATH) Act of 2015 passed both the House and Senate and has been signed into law.
The new legislation affecting eligibility for 831(b) election for captives is effective for taxable years beginning after December 31, 2016. Premiums allowed under section 831(b) are increased from $1.2m to $2.2m annually, with indexing for inflation starting in 2016. The legislation includes new restrictions on the ability to qualify for section 831(b) treatment and addresses concerns over abusive arrangements.
These new provisions help to clarify congressional intent providing ongoing support for small captives which comply with responsible risk management objectives.