Federal Tax Day - Current, J.2, IRS Responses to RFA Were Unsatisfactory; Deductions for Premiums Denied (Beveled Edge Insurance Company, Inc., TCM), (Jul 21, 2026)

In consolidated cases, the IRS disallowed deductions for premiums paid in captive insurance arrangements. The lead taxpayer was an insurance company (I1). The IRS also increased the income of I1.

Request for Admissions

The taxpayers served a request for admissions (RFA) to the IRS. The court deemed that the IRS’ responses did not satisfy the taxpayers’ requests under Rule 90. The court referenced Asea, Inc. v. S. Pac. Transp. Co., 669 F.2d 1242, 1247 (CA-9) (1981), highlighting it had discretion to rule when IRS responses were not in good faith despite a prior court order.

Evasive Pattern and Sanction

The IRS did not have a pattern of evasive responses related to the RFA. However, the court noted that multiple objections from the IRS were not justified. The court did not impose a sanction on the IRS.

Beveled Edge Insurance Company, Inc., TC Memo. 2026-57, Dec. 62,868(M)