Is 831(b) ruling one of the US captive industry’s biggest wins? 

• More firms likely to work with 831(b) captives but hesitancy expected 
•  Ruling does not limit the IRS’s authority to conduct its audits on 831(b)s 
• Likelihood IRS will appeal latest Texas court’s micro captive ruling  

Industry opinion has varied following the Drakes Plastics Ltd. Co. v Internal Revenue Service (IRS) ruling earlier this month, in which the US District Court for the Southern District of Texas partly struck down IRS regulations in relation to captives making the 831(b) tax election. 

Some commentators speaking to Captive Intelligence argue that the latest ruling is one of the biggest wins for the captive industry in recent years, while others believe the ruling may not ultimately change much in practical terms.