Index: tests/phpunit/tests/taxonomy.php
===================================================================
--- tests/phpunit/tests/taxonomy.php	(revision 28048)
+++ tests/phpunit/tests/taxonomy.php	(working copy)
@@ -168,4 +168,40 @@
 		wp_set_object_terms( $post->ID, $term['term_id'], 'category' );
 		$this->assertTrue( in_category( $term['term_id'], $post ) );
 	}
+
+	/*function test_insert_category_create() {
+		$cat = array( 
+			'cat_ID' => 0, 
+			'taxonomy' => 'category', 
+			'cat_name' => 'test1'
+		);
+		$this->assertTrue( is_numeric( wp_insert_category( $cat, true ) ) );
+	}
+
+	function test_insert_category_update() {
+		$cat = array( 
+			'cat_ID' => 1, 
+			'taxonomy' => 'category', 
+			'cat_name' => 'Updated Name'
+		);
+		$this->assertEquals( 1, wp_insert_category( $cat ) );
+	}
+
+	function test_insert_category_force_error_handle() {
+		$cat = array( 
+			'cat_ID' => 0, 
+			'taxonomy' => 'force_error', 
+			'cat_name' => 'Error'
+		);
+		$this->assertTrue( is_a( wp_insert_category( $cat, true ), 'WP_Error' ) );
+	}
+
+	function test_insert_category_force_error_no_handle() {
+		$cat = array( 
+			'cat_ID' => 0, 
+			'taxonomy' => 'force_error', 
+			'cat_name' => 'Error'
+		);
+		$this->assertEquals( 0, wp_insert_category( $cat, false ) );
+	}*/
 }
Index: src/wp-admin/includes/taxonomy.php
===================================================================
--- src/wp-admin/includes/taxonomy.php	(revision 28048)
+++ src/wp-admin/includes/taxonomy.php	(working copy)
@@ -89,53 +89,57 @@
  * @param bool $wp_error Optional, since 2.5.0. Set this to true if the caller handles WP_Error return values.
  * @return int|object The ID number of the new or updated Category on success. Zero or a WP_Error on failure, depending on param $wp_error.
  */
-function wp_insert_category($catarr, $wp_error = false) {
-	$cat_defaults = array('cat_ID' => 0, 'taxonomy' => 'category', 'cat_name' => '', 'category_description' => '', 'category_nicename' => '', 'category_parent' => '');
-	$catarr = wp_parse_args($catarr, $cat_defaults);
-	extract($catarr, EXTR_SKIP);
+function wp_insert_category( $catarr, $wp_error = false ) {
+	$cat_defaults = array( 'cat_ID' => 0, 'taxonomy' => 'category', 'cat_name' => '', 'category_description' => '', 'category_nicename' => '', 'category_parent' => '' );
+	$catarr = wp_parse_args( $catarr, $cat_defaults );
 
-	if ( trim( $cat_name ) == '' ) {
-		if ( ! $wp_error )
+	if ( trim( $catarr['cat_name'] ) == '' ) {
+		if ( ! $wp_error ) {
 			return 0;
-		else
-			return new WP_Error( 'cat_name', __('You did not enter a category name.') );
+		} else {
+			return new WP_Error( 'cat_name', __( 'You did not enter a category name.' ) );
+		}
 	}
 
-	$cat_ID = (int) $cat_ID;
+	$catarr['cat_ID'] = (int) $catarr['cat_ID'];
 
 	// Are we updating or creating?
-	if ( !empty ($cat_ID) )
+	if ( !empty ( $catarr['cat_ID'] ) ) {
 		$update = true;
-	else
+	} else {
 		$update = false;
+	}
 
-	$name = $cat_name;
-	$description = $category_description;
-	$slug = $category_nicename;
-	$parent = $category_parent;
+	$name = $catarr['cat_name'];
+	$description = $catarr['category_description'];
+	$slug = $catarr['category_nicename'];
+	$parent = $catarr['category_parent'];
 
 	$parent = (int) $parent;
-	if ( $parent < 0 )
+	if ( $parent < 0 ) {
 		$parent = 0;
+	}
 
-	if ( empty( $parent ) || ! term_exists( $parent, $taxonomy ) || ( $cat_ID && term_is_ancestor_of( $cat_ID, $parent, $taxonomy ) ) )
+	if ( empty( $parent ) || ! term_exists( $parent, $catarr['taxonomy'] ) || ( $catarr['cat_ID'] && term_is_ancestor_of( $catarr['cat_ID'], $parent, $catarr['taxonomy'] ) ) ) {
 		$parent = 0;
+	}
 
 	$args = compact('name', 'slug', 'parent', 'description');
 
-	if ( $update )
-		$cat_ID = wp_update_term($cat_ID, $taxonomy, $args);
-	else
-		$cat_ID = wp_insert_term($cat_name, $taxonomy, $args);
+	if ( $update ) {
+		$catarr['cat_ID'] = wp_update_term( $catarr['cat_ID'], $catarr['taxonomy'], $args);
+	} else {
+		$catarr['cat_ID'] = wp_insert_term( $catarr['cat_name'], $catarr['taxonomy'], $args);
+	}
 
-	if ( is_wp_error($cat_ID) ) {
-		if ( $wp_error )
-			return $cat_ID;
-		else
+	if ( is_wp_error( $catarr['cat_ID'] ) ) {
+		if ( $wp_error ) {
+			return $catarr['cat_ID'];
+		} else {
 			return 0;
+		}
 	}
-
-	return $cat_ID['term_id'];
+	return $catarr['cat_ID']['term_id'];
 }
 
 /**