MDNews - San Antonio

2. QUITE OFTEN, THERE ARE BUSINESS EXPENSES THAT END UP BEING PAID BY THE PHYSICIAN PERSONALLY WITH NO REIMBURSEMENT BY THE MEDICAL PRACTICE. One of the major tax cut changes was to disallow individuals from taking deduc- tions related to unreimbursed business expenses. These expenses should be captured and paid by the medical prac- tice. Doing this creates deductions for the practice with the physician being reimbursed on a nonta xable basis, as the physician is simply reimbursed for business expenses. The physician must provide written documentation. Examples of these types of expenses could include: a. An office in the home of the physician, especially if substantial office administra- tive procedures/functions are done at the home. The reimbursement would consider expenses incurred to maintain the house and household. b. Mileage by the physician to meet with his/her advisors, such as the CPA, attorney or other medical profession- als. Any travel that benefits the medical practice should be reimbursed, including business entertainment miles. c. Reimbursement of items like board exam fees, continuing medical education and medical association dues. 3. IF THE CHILDREN OF THE PHYSICIAN HAVE DONE SOME WORK THAT BENEFITED THE MEDICAL PRACTICE, THEN THOSE CHILDREN SHOULD BE PAID A SALARY FOR THEIR WORK, EVEN IF THE SALARY IS LATE IN ARRIVING. If the work of the children is justified, the salary could be several thousand dollars without there being any income tax to the children while still being a deduc- tion for the medical practice. With those salaries, Roth IRA accounts up to $6,000 (if salaries are $6,000 or more) could be funded for the children. Jim Rice, CPA 4. OFTEN TIMES, THE MEDICAL PRACTICE HAS ON ITS BOOKS AN EXPENSIVE CAR THAT IS BEING WRITTEN OFF OVER A MUCH EXTENDED PERIOD OF TIME. This makes for the car having a high tax basis but a much lower market value. If the physician is so inclined to dispose of this car in favor of another car, then the physician should carefully think about selling the current car. This would allow for a large deduction on the loss of the sale of a business asset. 5. IF THE PHYSICIAN DOES NOT CURRENTLY HAVE A LARGE REGULAR IRA ACCOUNT BALANCE, THEN THE PHYSICIAN SHOULD CONSIDER FUNDING A NONDEDUCTIBLE IRA ACCOUNT AND THEN IMMEDIATELY ROLLING OVER THAT NONDEDUCTIBLE IRA ACCOUNT INTO A ROTH IRA ACCOUNT. This process allows the Roth IRA account to grow on a tax-free basis with the future withdrawals not being taxable at all. There are requirements as to how long the Roth IRA account must be held. This funding of the nondeductible IR A account does not create a tax deduction, so it is not neces- sarily a tax planning move. However, it is usually at this time of the year that physi- cians think about tax planning moves. 6. WITH STOCK MARKET INVESTMENTS, THERE MAY BE CAPITAL LOSSES AVAILABLE TO TRIGGER SO AS TO ELIMINATE ALREADY-INCURRED CAPITAL GAINS AND CAPITAL GAINS DISTRIBUTIONS FROM STOCK HOLDINGS. 7. ACQUISITIONS OF BUSINESS DEPRECIABLE ASSETS AND SOFTWARE, IF NEEDED, SHOULD ALWAYS BE CONSIDERED. It 's w o r t h p oi n t i n g o u t t h a t f i x e d a sset pu rcha ses f i na nced w it h loa ns w i l l a lso qua lif y. In ta ndem w it h t his idea is accelerating pay ment of f i xed ex penses (rent , supplies,i nsu ra nces, ut i l it ie s) i nt o t he c u r r ent ye a r. A n exa mple of t his is pay ing t he Ja nua r y rent in December to get t he deduction i n t he c u r r ent ye a r. E x p en s e s pa id w it h a cr e d it c a r d a l s o r epr e s ent a deduction in t he cur rent yea r, even if t he credit ca rd is not pa id of f unti l t he follow ing yea r. The issue of whether to a ccelerat e deduct ion s i nto t h is yea r or push t hem i nto nex t yea r is ba sed on a n u nderst a ndi ng of you r cu r rent t a xable i ncome sit uation . Th is poi nt ca n not be overstated. 8. FINALLY, IT IS JUST AS IMPORTANT TO REVIEW THE CURRENT TAX REPORTING STRUCTURE FOR YOUR MEDICAL PRACTICE. If t he practice is repor ting to t he IR S other tha n a s a n "S" cor poration, there s hou ld be a n a n a ly si s of t he mer it s of c on v e r t i n g t h e t a x s t a t u s t o a n " S " cor porat ion . T h i s idea does not ordina r i ly apply to medica l practices that operate a s pa r tnerships w ith each physicia n a s his/ her ow n sepa rate ta x repor ti ng entit y. There a re cer ta i n ly ta x-pla nning idea s w ith this str ucture a s wel l. Bottom line: Be sure to meet with your CPA soon. Jim Rice, CPA, is a shareholder at Sol Schwartz & Associates PC. He has 42 years of experience in public accounting. In addi‑ tion to providing business consultation, financial planning and various other accounting services, Rice specializes in income tax planning and consultation. He works with a high concentration of physician practices and high‑net worth individuals. Contact Rice at 210‑384‑8000, ext. 112, or by email at jprice@ssacpa.com. Kimberley Briones, CPA, is a Senior Tax Associate with Sol Schwartz & Associates PC. She enjoys helping individuals and healthcare organizations with tax compliance and planning issues. She earned a Master of Healthcare Administration and is passionate about both healthcare and accounting. Contact Briones at 210‑384‑8000, ext 157, or by email at ktb@ssacpa.com. 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 ■ 2 019 1 1

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