Indiana Department of Revenue v. United Parcel Service, Inc.

RUCKER, Justice.

In this case we examine whether income received by a corporation’s affiliated foreign reinsurance companies falls within the ambit of Indiana’s gross premium privilege tax statute and is on that basis exempt from Indiana adjusted gross income tax.

Background

Typically, insurance premiums paid by a corporation are deductible from federal corporate gross income as ordinary and necessary business expenses. See Clinton N. McGrath, Jr., Using Captives to Manage Risk, 35 Am. Inst, of Certified Pub. Accountants Tax Adviser 419, 419 (July 2004). However, a company electing to insure its…