Author:
Glenn Henderson, CPA/ABV, CVA, AEP
Partner, CCK Strategies, PLLC
A Better Tax Structure For Providers
One of the things that we’ve told the larger anesthesia groups that we’ve worked with is that they can create a better tax structure for the anesthesiologists that are in their group. So far we haven’t had any take this route, but I think it’s worthwhile to share this plan so that if you have enough members of the group that are proponents, maybe the large groups could change their direction.
Usually, all or almost all of the anesthesiologists that are in a large group get a huge W-2. And as you know, with the tax law changes that have come about in the last few years, you’ve lost your miscellaneous itemized deductions or non-reimbursed business expenses–they’re just not even available anymore.
So we approach the large groups with this example: If we have someone who makes $750,000 as their gross taxable wages on their W-2, why can’t we shift that–at no expense to the large group, actually saving them some money too–to a $650,000 W-2 with $100,000 available for reimbursable expenses like automobiles, uniforms, tools of the trade? The things that anesthesiologists incur could be reimbursed expenses. Their total package would still be $750,000, but we would be taking $100,000 out of their income tax return. So it’s no small thing, but we just haven’t had any receptivity from the big groups.
I think if enough of a group’s anesthesiologists would express their interest, that would probably carry more weight than a tax accountant like me coming in and making a suggestion. We’ve had some success along those lines with others before, where we’ve been able to set up a reimbursement process for the professionals, lower their wages, and everybody wins. The group doesn’t have to pay payroll taxes on the reimbursed expenses, and our client not only lowers their W-2 by the $100,000, but they also don’t have to pay the additional ObamaCare tax on their tax return, so it becomes fairly significant, if you think about it.
Providers With Separate Investments
We have had anesthesiologists that have had separate investments, so we help with those things. For instance, one of our clients, an anesthesiologist, actually invented something. Of course, in the process of developing an invention like this, you have expenses, so we’ve set up ways to capture those expenses. Something to be aware of, here, is that if your invention comes to fruition, the income on that can be long-term capital gain rather than ordinary income. That means that we could save half the income tax on the ultimate income from that invention.
Other Investments
We’ve also worked with some other investments, like some of our clients that are doctors or anesthesiologists invest in rental properties or even ranches. Recently, I managed a project where a client purchased a $2 million rental, so we had them outline the fencing and how many tanks and describe the tanks, the barns, any other hay structures or what are called cultural structures, or even the house that might be sitting there that the foreman house. From there, we can actually set those up on a shorter depreciation schedule by doing that purchase allocation on the purchase of the property. Those can be some significant first year expenses for a ranching operation.
What I’m hoping to get across to the anesthesia crowd here are some ideas that with a little structure and with a little strategy, we can save a significant amount of income tax.
Questions?
If you’d have any questions about taxes and your anesthesia practice, you can reach out directly to Glenn via email at [email protected].
About The Author
Glenn Henderson has been a CPA for over 43 years. After running his own practice for 27+ years, Glenn saw an opportunity to partner with a forward thinking practice and expand service offerings to his clients. He merged his practice with the CCK Strategies team and now specializes in mergers and acquisitions as the partner over the Texas office. He has worked successfully with small and large anesthesia practices throughout the years.
About CCK Strategies, PLLC
CCK Strategies is a Tax and Business Consulting firm that combines a broad scope of expertise with personalized service. With a team of more than 125 people serving clients worldwide, CCK provides innovative solutions and creates value at every stage of a business’s life cycle.
CCK offers the depth of resources, both domestic and international, required to be successful in today’s business marketplace. We are more than a firm, we are your partners.
Headquartered in Tulsa, CCK also expanded into a Texas office in Plano, TX in 2017.
CCK Strategies, PLLC Website: https://www.cckcpa.com/
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