Experts Weigh in With Timely Tax Advice

Jan 02, 2014 at 05:31 pm by Staff

The taxman cometh.While you might not be able to stop the inevitable progression to tax day, at least you can take heart in knowing Nashville has a cadre of highly capable accountants and financial professionals with expertise in the healthcare industry to help minimize your personal or corporate tax liability. Following are a few tips to keep in mind whether preparing for your personal return or looking at business tax burden.Timing is Important – Get Organized EarlyJan Kolb, CPAPartnerFox, Kolb & Associates, PLLC
Most CPAs are exhausted by March 15 and simply do not have the energy they did just a few months before. You are going to get much better service if you get your information to your CPA in January or February when he or she is still at their prime. It is like the difference between writing an essay with a sharpened pencil or a worn out pencil stub. The result will be prettier and much more efficient.Separating Business from PleasureMark Patterson, CPAMemberKraftCPAs PLLCInstead of using old-fashioned paper mileage logs, anyone who needs to keep track of miles driven in a personal automobile should try apps on your smartphone like TripLog or Trip Cubby. Some apps will actually coordinate with a GPS, helping to make record keeping more automatic. Instead of trying to file and save all of your business receipts, try using a small scanner to quickly scan your receipts. Many will offer direct upload to a cloud-based storage solution.  When it comes time to file your return, all of your records are in one convenient, digital location.It is best to keep your business and personal finances separate. If you ever have an IRS audit of your business … if they become aware that you were paying personal expenses out of your business account, even if you have accounted for them correctly … it could lead them to dig deeper than they normally would to potentially find personal expenses that were actually deducted.Before Consolidating, Know Your NetMike Collins, CPACEO & Managing Member 2nd Generation Capital, LLCConsolidation is in vogue for medical practices of all types. An outright sale of a practice is often seen as a way for physicians to realize some of the value they have built and to transition into a larger organization that can better navigate the changing healthcare landscape. At first glance, what a physician sees as a highly desirable transaction value can quickly turn to seller’s remorse when the after-tax, net-to-the-pocket number becomes a realityPhysician practices operate in many business forms (S-Corps, C-Corps, LLC, PLLC, or GP’s). The most valuable asset a physician practice has to sell is the goodwill related in some manner to physician services. Goodwill can be attributable to the business (a business asset), to the individual physician (a personal asset), or to a mixture of each. The form of doing business and the nature of the goodwill, and the type of sale transaction (asset vs. stock) are all factors that influence how the proceeds will be taxed. The answers are highly technical and nuanced. The result however is real money. The outcome could be very advantageous capital gains treatment; the much less desirable ordinary tax rate treatment; or the worst of all cases, two levels of tax where the gain is taxed at both the business and individual level.Too many practices only find out the consequences in the last stages of a deal. By that time, expectations have been built and deal expenses have been incurred. Before practice physicians consider a possible sale as a strategic option, they need to prepare. A professional team of lawyers, accountants, and investment bankers should carefully review the practice’s form of business and identify the nature of the goodwill that will be transferred to a buyer. It is prudent to get prepared at the start: determine what you have to sell, how best to sell it, and most importantly what will be the net-to-the-pocket value to the physician. After all, it is the net – not the gross – that matters.And Along Those Same Lines … Corporate Transactions: Stock vs. AssetsJayme Parmakian, CPAManager, Tax ServicesLattimore Black Morgan & Cain, PCIn today's business environment we are seeing a meaningful increase in transaction volume. If you are the seller in the transaction, here are some key tips to keep in mind.It is generally beneficial to sell the stock of a corporation versus its assets. The highest federal tax rate for long-term capital gains is 23.8 percent (this includes the new 3.8 percent net investment tax). If you were to sell the assets of your corporation, some of the gain would likely be taxed at the highest federal ordinary rate of 43.4 percent (this includes the new 3.8 percent net investment tax)If you sell the stock of your S Corporation and the buyer wants you to make a Section 338(h)(10) election, you need to make sure the acquisition agreement states the buyer will gross-up the sales price to cover the additional tax owed due to making the election. It is going to be the seller's responsibility to determine and provide support for the step-up.If you sell the assets of your company, you and the buyer should contractually agree to a purchase price allocation. The allocation of the purchase price between the assets will determine the amount of any gain that will be taxed at ordinary rates versus capital gain rates. The important thing to remember is that there are different benefits to the buyer and seller depending on how a transaction is structured. It is likely that if something benefits the buyer, it may increase the tax liability of the seller. So, make sure that you always consult a competent tax advisor while negotiating your business deal.

Your Unique SituationThere are many variables that impact your tax position. Please contact an accountant to discuss your tax burden for 2013 and to plan ahead for the coming year. 

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