Microcaptive Structure Declared Noneconomic; Underpayment Penalties Upheld

( March 30, 2026, 2:20 PM EDT) -- WASHINGTON, D.C. — Applying a recently established framework governing the economic substance doctrine and disclosure requirements in microcaptive insurance cases, a U.S. Tax Court judge held that a purported captive arrangement failed both prongs of the economic substance test and sustained a 40% accuracy-related penalty for a nondisclosed noneconomic substance transaction....