Clark & Gentry PLLC will close its captive operations as of 31 December this year.
The company, which has been in the business of advising and supervising micro captives since 2002, was responsible for structuring and managing the Avrahami captive.
Judge Mark Holmes issued his long-awaited ruling on 21 August, confirming that payments made to the Avrahamis by their micro captive, Feedback, fell outside of the scope of certain tax elections, including 831(b) for investment income up to $1.2 million.
In particular, Judge Holmes held that the pooling entity was not a bona fide insurance company, and that the captive did not operate like an insurance company because it issued policies with unclear and contradictory terms, and charged wholly unreasonable premiums.
The judge found that the Avrahamis “acted with reasonable cause and in good faith” because they relied on professional advice from various companies, including Celia Clark, partner of Clark & Gentry.