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New York Tax Appeals Tribunal -- insurance premiums paid to a captive insurance company are not deductible

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The New York State Tax Appeals Tribunal recently held that a taxpayer parent corporation could not reduce its New York entire net income by amounts it paid as premiums to its wholly-owned, captive insurance subsidiary. In its decision, the tribunal concluded that the lack of risk-shifting and risk distribution between the parent and subsidiary resulted in intercompany payments that were not deductible for federal income tax purposes, and hence, not deductible for purposes of determining New York entire net income.