The tax code says self-insuring risk is not deductible

1986 congress introduced 831B – farmers were ensuring their crops. This began this concept.

Below are some notes were taken on this subject:

• Additive to regular insurance
• Not malpractice insurance
• Insure your brand with pre-tax dollars
• Eligible yearly premium – 10% of gross billing from the previous year
• Use a C-Corp
• Why? Self-insure against low probability intangible events within your business
• Business expense
• Lowers your taxable income
• Very similar to banking from yourself
• Used to pay out for warranties for your products – use for a marketing tool for your business
• You can leave the money in the program (insurance), borrow the money paying yourself insurance, declare a dividend
• Congress has increased (2015 Path act) 831B to $2M with inflation rider and got rid of lineal descendants
• Previously a red flag for tax auditing
• Fortune 500 companies always have insurance company offshore, try to do in USA with yours
• To ensure brand issues such a stupid comment on social media NOT incase your key employee leaves