Tax Indemnity policies insure against the contingent outcome of known tax risks. BlueChip focuses on tax risks present within a merger or acquisition that are not typically covered under a Representations & Warranties policy. A Tax Indemnity insurance policy can serve as another way for buyers and sellers to mitigate such risks.

A Tax Indemnity policy in the merger or acquisition context may be used to insure against unfavorable tax resolution outcomes for the following issues:

  • S-Corp status of a target company
  • Availability of net operating loss carry-forwards
  • Validity of Section 338 elections
  • Availability of solar energy tax credits
  • Public company reserves for uncertain tax positions

BlueChip will not consider underwriting a Tax Indemnity policy for tax shelter driven deals, listed or reportable transactions, or any transactions structured without a bona fide non-tax business purpose.