P. Bruce Wright of Eversheds Sutherland (US) LLP discusses the evolution of taxation for cell captive insurance companies in this video. Historically, the Internal Revenue Service (IRS) has struggled with how to deal with cell captive taxation (i.e., to treat it as one company or individual cells) and published a 2008 ruling to deal with the issue of whether or when a cell participant may obtain a tax deduction for the premium it pays to the cell. The IRS said that the same rules that apply to captive premium deductions also apply to cells (e.g., common notions of insurance, risk transfer, risk distribution, etc.). At the same time, the IRS issued a notice asking for comments on how the cell company should actually be taxed. In 2010, the IRS said that it would tax domestic cells separately (i.e., ownership by each cell participant of its own cell). However, offshore cell captives did not slice up as neatly and instead depended on the nature of the transaction (i.e., insurance or no insurance) and other factors (such as status as a controlled foreign corporation). Thus, the IRS guidance left unresolved taxation issues with the expectation for more guidance to come.