As a follow-up to Tuesday’s email blast re PLR 202114002 (the favorable §1202 ruling involving an insurance agent/broker), we were advised by Adam Sweet, who leads Eide Bailly’s Passthrough Entity Consulting Group and is a regular Tax Planning Forum attendee, that his client was the recipient of the PLR. Adam tells us that, as we suspected, the IRS focused on the definition of an insurance company in §816 as to what the §1202(e)(3)(B) “insurance business” prohibition relates, i.e., an issuer of life insurance policies and annuity contracts (and not an agent/broker selling same). Adam further indicated that the battle was over the definition of “brokerage services,” and that the IRS would not look to the definition in Reg. §1.199A-5(b)(2)(x), notwithstanding that §199A refers to the definition contained in §1202(e)(3)(A). Instead, Adam and his group had to convince the IRS that the services of an insurance agent/broker did not satisfy the common understanding of the term “brokerage services” as used under state law and in other areas of the Code. We appreciate Adam sharing his insights with us.