☰A 953(d) election lets a foreign captive, one domiciled offshore in Bermuda or the Cayman Islands for example, elect to be treated as a US taxpayer. The captive files and pays tax as if it were domestic, which simplifies life for a US parent in several ways: it avoids the federal excise tax on premiums paid to foreign insurers, sidesteps most of the controlled foreign corporation complexity, and lets the program use the same insurance tax provisions a domestic captive would.
The election is common enough to be routine for US-owned offshore captives, and it is one reason the onshore versus offshore choice is less dramatic than it sounds; a 953(d) captive in Cayman and a captive in Vermont face broadly similar federal tax treatment. The choice between them then rests where it should, on regulation, cost, and fit.
This does not constitute tax or legal advice. Decisions regarding a Luzern captive will be made in consultation with legal counsel well versed in captive insurance law.