On March 10, 2021, the Tax Court issued a Memorandum Opinion in the case of Caylor Land & Development v. Commissioner (T.C. Memo. 2021-30). The primary issues presented in Caylor Land & Development v. Commissioner were whether consulting payments made between the petitioner and its microcaptive insurance company were ordinary and necessary business expenses or insurance expenses. Brief Background (to Lay a Foundation for Judge Holmes’ Puns) in Caylor Land & Development v. Commissioner The Caylors, Bob and Rob, founded and kept afloat, a thriving construction company for over 50 years.  The company needed insurance, and having found the traditional route too expensive, Bob and Rob decided to get into the microcaptive insurance industry.  Insurance cost the company $60,000 per year, but beginning in 2007, the company increased their insurance bill by taking out policies from a related microcaptive insurer at a cost of $1.2 million annually. At the same…