IRS PLR: Prior PLR Revoked, Taxpayer’s Per Incident Combined With Reimbursement Contracts Not Insurance (IRC § 831)

The IRS has published a private letter ruling on Section 831 revoking a prior private letter ruling that had determined that taxpayer’s 1997 contract X with a certain manufacturer was an insurance contract for federal income tax purposes. The IRS has now concluded that the prior PLR’s determination that contract X was insurance is not in accord with the current views of the Service. The current ruling concludes that contract X, which was essentially a Per Incident Contract combined with a Reimbursement Contract, did not have the requisite fortuity to constitute an insurance risk and thus does not qualify as ...