PPLI, Captive Insurance, and Capital-Gains Planning
The Hidden Cost of Success? Taxes.
Tax exposure can affect a business exit, an investment portfolio and the wealth available to your family. At the Law Office of James Burns, we evaluate legal planning options in coordination with your CPA and other advisers. The structure should fit the transaction and its risks, rather than begin with a promised tax result.
Our tax-sensitive planning can involve Captive Insurance, Private Placement Life Insurance (PPLI), Structured Installment Sales, and appropriate nonprofit or NGO-aligned strategies. Suitability, scope and implementation requirements are reviewed before a recommendation.
🛡️ Captive Insurance: Protect, Control, and Save
What Is Captive Insurance? A captive is an insurance company established to cover appropriate business risks. For taxable years beginning in 2026, the section 831(b) premium eligibility limit is $2.9 million, measured by net written or direct written premiums, whichever is greater. An eligible insurer making the election is taxed on taxable investment income; this is not a $2.9 million tax-free investment-growth allowance or an automatic deduction for the insured business. Real insurance risk, pricing, risk distribution, regulatory requirements and any applicable transaction-disclosure rules require independent analysis. See IRS Revenue Procedure 2025-32.
Why Captive Insurance?
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Evaluate coverage for business risks that conventional insurance may not adequately address
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Review whether premiums qualify as deductible insurance expenses; the deduction is not automatic
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Coordinate claims funding, reserves and applicable tax treatment
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Gain risk control and claims flexibility
Industries That Benefit:
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Manufacturing: Insure supply chain interruptions
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Healthcare: Address malpractice gaps
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Real Estate: Manage tenant liability exposure
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Tech & eCommerce: Shield from cyber breach losses
Jurisdiction Selection: Compare regulatory, insurance and tax requirements, including those applicable to Puerto Rico, against the actual business risks. A jurisdiction's label or incentives do not establish federal tax eligibility.
💼 PPLI: The Private Life Insurance Solution for High Net Worth
What Is PPLI? Private Placement Life Insurance is a privately negotiated life insurance contract for eligible affluent clients. Qualifying policies may allow tax-deferred accumulation and death benefits generally excluded from income tax, subject to requirements and exceptions. Estate-tax inclusion, creditor protection, policy funding, diversification and investor control must be evaluated separately.
How PPLI Helps:
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Evaluate tax-deferred accumulation within a qualifying policy
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Coordinate death-benefit treatment with ownership and trust design
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Assess cross-border ownership and creditor rules where international jurisdictions are appropriate; an offshore policy is not blanket protection
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Integrate with Dynasty Trusts or California Private Retirement Plans (CPRP)
For Pre-Immigration Tax Planning: Review residency, domicile, policy ownership and U.S. tax consequences before a move. International PPLI planning requires coordination with qualified advisers in the relevant jurisdictions; results depend on the facts and applicable rules.
Structured Installment Sales: Timing and Tax Requirements
What Are Structured Installment Sales? Section 453 installment treatment may defer recognition of gain on eligible property sales when payments are received over time. It generally does not apply to publicly traded stock or securities, inventory or dealer sales, subject to specific exceptions. Interest, depreciation recapture, related-party rules, constructive receipt and any applicable pledge or deferred-tax interest rules require separate review. See IRS Publication 537.
Agricultural Transactions: A qualifying sale of agricultural property may warrant installment-sale analysis. Spreading payments or changing an entity's form does not, by itself, convert ordinary crop income into long-term capital gain. The property sold, tax basis, inventory status and character of income must be reviewed with the CPA.
Ideal For:
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Business owners planning an exit
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Real estate investors looking to preserve liquidity
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Agricultural owners evaluating an eligible property or business sale
We evaluate legal structure and transaction requirements within the agreed scope, coordinating with the CPA and other advisers before implementation.
🌍 Using Nonprofits and NGOs: Creative Tax Alignment
What If Your Mission Aligns with a Purpose? We assist clients in establishing 501(c)(3) nonprofits or collaborating with NGOs (non-governmental organizations) to:
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Evaluate activities that support a genuine charitable purpose
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Develop private foundations for legacy or philanthropic goals
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Review charitable deductions, governance and reporting requirements
Charitable planning must serve an exempt purpose and respect restrictions on private benefit and inurement. A nonprofit or NGO arrangement is not a personal investment account or a guaranteed tax-saving device. Review governance, deductions and ongoing compliance with qualified advisers.
📞 How to Get Started
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Begin with Risk Exposure Mapping: Complete the required form and ask about the appropriate billable advanced-planning or asset-protection meeting.
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Feasibility Review: Coordinate legal, tax, financial and, where needed, actuarial analysis. Estimates depend on assumptions and do not guarantee savings.
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Implementation: Assign responsibility for legal documents, tax reporting and ongoing administration under the engagement's agreed scope.
✉️ Contact Us
Your tax planning should be coordinated with your business and estate plan. We help identify legal exposure, evaluate suitable options and organize the work required to implement them.
📍 Schedule your confidential consult: Call (949) 305-8642
⚖️ Disclaimer:
The information on this page is for general informational purposes only and should not be construed as legal, tax, or financial advice. Use of strategies such as PPLI, Captive Insurance, Structured Installment Sales, or nonprofit structuring requires proper legal design and compliance with federal and state laws. Results vary and tax benefits depend on each client's unique circumstances. Please consult with qualified professionals before making financial decisions. Engagements are subject to formal agreement.
Planning From Our Aliso Viejo Office
The Law Office of James Burns serves Orange County families, business owners, and professionals from Aliso Viejo, including Newport Beach, Laguna Niguel, and Laguna Beach. Start with Risk Exposure Mapping and a Situation Readiness Briefing to identify the appropriate scope of planning before selecting documents or structures.