Issue link: https://viewer.e-digitaledition.com/i/1004438
used assets qua lify for a 100 percent bonus depreciation write-off. It is impor ta nt to note that a bonus depreciation write-off ca n be uti lized even if a business does not generate a net income. For physicia n practices in sta r t-up or expa nsion mode, this ca n be a g reat option to generate ta x deductions i n t he yea r of ex pend it u re to help avoid ta x bi lls when collections a re slow or cash is tight. For established physician practices, ta x planning to utilize this ex pa nded immediate deduction of capita l expenditures in order to qua lify for the Q BI deduction should be considered. A d d i t i o n a l l y, a c c e l e r a t e d d e p r e - ciat ion u nder I nt er na l R evenue Code S e c t i o n 17 9 h a s b e e n i n c r e a s e d t o $1 million under the TCJA . Section 179 is a llowed to the ex tent of business prof it a nd ca n be t a ken on elig ible proper t y, which does not include the cost of a build- ing a nd la nd. However, the def inition of elig ible proper t y ha s been ex pa nded to include a roof, H VAC and security system improvements. Again, in consideration of ma ximizing the potentia l Q BI deduction, f ur ther a na lysis shou ld be g iven to the accelerated depreciation options when a physicia n's overa l l ta xable income is over or under the $415,000 Q BI threshold. The TCJA a lso made severa l cha nges to mea ls a nd enter ta inment ex penses. In shor t, the majorit y of enter ta inment expenses a re no longer deductible for ta x pur poses. This includes activ ities such a s ta king a client or referra l source to a sporting event, concert or theater and a lso includes a mounts pa id for membership in a club orga nized for business or socia l pur poses. Mea l cost s i ncur red dur i ng entertainment activities are a lso no longer deductible. Mea ls w ith clients, referra l sources or prospects w it h substa ntia l business discussion, on-premise mea ls pr o v i de d for t he c onv en ien c e of t h e employer, a nd employee t ravel mea l s are 50 percent deductible. A holiday party or si m i la r event for employees is st i l l fully deductible. For practices that ma inta in a compa ny vehicle for business pur poses, the new t a x law ch a n ged t he t a x t reat ment of veh ic le t r a de -i n s . I n pr e v iou s ye a r s , vehicle trade-ins qua lif ied for like-kind excha nge treatment, which a llowed for the deferra l of the ga in recog nized from the a mount received in consideration of the vehicle being traded in. The new ta x law removed vehicles as proper ty eligible for this treatment. Moving for ward, when a business vehicle is traded in, ta xable gain could be triggered on the transaction to the ex tent of trade-in va lue a nd prior depreciation ta ken on t he vehicle. Ta x pla n n i ng is now even more i mpor t a nt when dea ling with the disposition of a n expensive business vehicle. There is still a lot of information to unpack from the TCJA. Tax advisors expect much more information from the IRS on provisions within the new tax law that need further clarification. These future clarifications could change the current understanding of the bigger changes, such as the QBI deduc- tion. As such, it is very important that your tax advisor keep you informed about how the new tax law and expected further clarifica- tions will affect your tax situation. Christopher Davis, CPA , is a Manager with Sol Schwartz & Associates PC and ha s bee n pra ctic ing public a ccounting since 2008 . Davis practices in var iou s areas of public accounting, including tax compliance and consulting for individual , corporate, S corporation and partnership ta xatio n . He is a m e mbe r of th e f ir m's h e a l t h c a r e n i c h e t h a t s p e c i a l i z e s i n identifying and implementing solutions to achieve the goals of the physician cli- e ntele we se r ve . You can contact Davis via email at cbd@ssacpa .com or call him at 210 -384-8000, ext. 118 . n M D N E W S . C O M /// M D N E W S S A N A N T O N i O ■ 2 018 1 5