The Senate Finance Committee had tasked the IRS to develop some form of asset-based bright line test to separate off-shore (re)insurance companies from Hedge Fund shelters.

As noted in my prior post, last Thursday’s proposal does not have a bright line test, but has some other tests that may be troublesome to (re)insurers. For example:

“The proposed regulations define active conduct of an insurance business to mean that officers and employees of the business carry out substantial managerial and operational activities, and employees and officers of related entities cannot be considered to satisfy the test.”