According to Gary I. Glassman, partner, Burzenski & Company, PC, "The choice of your practice's retirement plan is a big deal not only for the staff, but for the employer as well." 

 

http://veterinarybusiness.dvm360.com/2-retirement-plans-veterinary-hospitals

 

Gary I. Glassman, CPA, Burzenski & Company, P.C.

Tel203.468.8133   Fax203.469.8515

E-mail:Gary@burzenski.com

  

You have been in practice ownership mode for many years and now you must begin to pursue the next venue in practice life. The sale of your practice to another veterinarian. Who will that be?

 

How are practices sold? 

Practices are sold at once or over time in transition with an associate. If they are sold at once, the practice entity is usually selling its assets. If the practice entity is a corporation, sometimes the practice stock is sold. This does not occur often though since buyers like to buy assets so they can obtain tax deductions for what they buy during the period of time they are making loan payments.

Who are the buyers?

 Locating buyers has always been a challenge but they can be right around your corner. Who are your choices: Associates, your colleagues, an unknown veterinarian, or a corporate buyer?

 

Associates Buyins: 

Associates can be a great find and make for a natural transition. They know the practice and their buy in can be arranged over time. Associates are usually interested in purchasing your practice and transitioning your way to retirement. They usually want to own the practice real estate as well. Sales of partial interests are accomplished with the sale of stock in a corporate environment or a partnership/member interest in a partnership/limited liability company.

 

Known Colleagues: 

These too may make easy transitions since they are known to you. These can be acquaintances or practitioners down the street who are looking for growth to add to their practice when market saturation exists. They are usually excellent to consider because they create economies of scale for the potential buyer.

 

Unknown Veterinarians:

Unknown veterinarians usually come from ads placed in journals, by word of mouth or through brokers. Brokers are excellent resources in that they create a market that didn’t exist but beware they are expensive. Brokers are paid a commission for selling the practice and they usually take the commission on the practice sales price as well as the real estate if that as sold as well. Their fees are common at somewhere between 6% and 10% of the sales price. Their fees are all inclusive in that they are for valuing the practice, developing a sales package for potential buyers, negotiating the transaction on your behalf and arranging financing for the buyer. They will also coordinate the legal process with attorneys.

Entrepreneurial veterinarians who may wish to purchase your practice will usually wish to purchase the entire practice with a short transition. They normally wish to purchase only selective assets and the practice real estate.

 

Corporate Buyers:

There is an array of corporate buyers in the marketplace. Corporate buyers are many times an attractive alternative to finding a private veterinarian, usually from the economic point of view but there are other things you may have to work through to know they are the right fit for you. They also have criteria for the type of hospital they are interested in buying and you have to fit that criteria for them to make you an offer. Corporate buyers normally pay what is referred to  as” investment value” for the hospitals they buy meaning they pay what it is worth to them as an investor without consideration of traditional financing. This, many times, may mean your hospital is worth more than fair market value as defined by traditional valuation methods. Corporate America, for the most part, is interested in purchasing the practice and transitioning your way to retirement. They are sometimes interested in purchasing the practice real estate and are very much interested in keeping your health care team solidified. They will want you to continue to work in the practice for up to a two year period of time and will pay you typically 20% of production and offer a standard benefit package they offer all. There is very little negotiating to be done in this area.

http://veterinaryhospitaldesign.dvm360.com/maximize-tax-savings-when-constructing-new-clinic?utm_content=bufferdb607&utm_medium=social&utm_source=linkedin.com&utm_campaign=buffer

  

Building a new veterinary facility is pricey. Veterinary Economics Hospital Design conference speaker Gary Glassman, CPA, partner, Burzenski & Company, PC explains how a cost segregation study can lighten the financial load.

 
Check out this article and video in Veterinary Economics about practice profitibility by Burzenski' and Company's partner Gary I. Glassman, CPA.

 

 

The tuition and fees deduction expired last year. Fortunately, you may still be able to benefit from other education tax benefits, including the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit.

Take a look at the highlights below to better understand these benefits:

*   The AOTC is per student, while the Lifetime Learning Credit is per tax return.

*   Either the parents or their dependent child can claim the credit each year, but not both.

*   You can't use these credits to pay expenses for room and board, health costs or transportation. While book expenses required for enrollment can be deductible, other book expenses are excluded from the credits.

*   If you received scholarships, grants and other tax-free assistance, or have used educational expenses for one of these credits, you may not reuse that expense for other tax benefits.

 

In some cases, it may be more beneficial to let your dependent claim an educational credit rather than including him or her on your tax return. We can help you figure out what's best for your situation. Contact us today at 203-468-8133.

When it comes to taking qualified deductions on your federal tax return, three things must happen:

  • Recognize that an expense might be deductible on your tax return.
  • Keep a record of the expense in an organized fashion.
  • Obtain the proper (and timely) documentation to support your deduction.

 

This might be obvious to most people, but here are some typical areas where taxpayers often fall short. In the long run, these items could end up costing you plenty during tax filing season, and trigger IRS audits.

  1. Cash donations to charity. To deduct and support your deduction to a qualified charity you must have valid support. Donations of cash are no longer deductible if they are not supported by a canceled check or written acknowledgement from the charity.

A donation deduction of $250 or more needs to be supported by documentation created at the time of the donation. A canceled check and bank statement are not sufficient. If you get audited, having the charity issue documentation after the fact may not be enough.

  1. Non-cash contributions. You need documentation for these donations as well. This includes a detailed list of items donated, the condition of the items and their estimated fair market values. While this level of detail is not required for small donations, keeping good records and taking photos is a good practice.
  2. Investment purchases and sales. If you bought or sold an investment you will need to know your cost basis. Today's regulations require brokers to report to the IRS the cost basis of investment sales. Review your broker accounts and correct any errors. It's very difficult to defend yourself in an audit when records reported to the IRS are in error.
  3. Copies of divorce decrees, alimony and child support agreements. There are often conflicts between two taxpayers taking the same child as a deduction. Do you have the necessary proof to defend your position? The same is true with alimony and child support. Keep these documents in a safe place and be ready to use them if necessary.
  4. Copies of financial transactions. Keep copies of documents from any major financial transaction. This includes real estate settlement statements, refinancing documents and any records of major purchases. These documents are necessary to ensure your cost basis in the property is properly recorded. The documents will also help identify any tax-related items like mortgage insurance, property taxes and possible sales tax paid.
  5. Mileage logs. Lack of tracking deductible miles is probably one of the most commonly overlooked documentation requirements. Properly recording charitable, medical and business miles can really add up to a large deduction. If the record is not available, the IRS is quick to disallow your deduction.
  6. If you are not sure whether a document is needed, retain it. Then you can always retrieve it if needed.


 

Health Savings Accounts (HSAs) are a great way to pay for medical expenses, and since unused funds roll over from year to year, the account can also provide a source of retirement funds in addition to other plans like 401(k)s or IRAs.

 

But be aware HSAs can also come with significant disadvantages and less flexibility when compared to other retirement investment tools.

 

The Good

HSAs work best when they are used for their designed purpose: to pay for qualified medical expenses. Neither your original contributions to an HSA nor your investment earnings are taxed when used this way.

 

This makes HSA funds valuable, given that medical costs are one of our largest expenses as we age. The Employee Benefit Research Institute estimates the average 65-year-old couple will need $264,000 to pay for medical care over the course of their retirement. Being able to cover that amount with pre-tax dollars greatly extends the value of retirement savings.

 

In addition, unlike other retirement plans, there is no required distribution of funds after you reach age 70½.

 

The Bad

First, you can only contribute to an HSA if you have a high-deductible health insurance plan. That means you will pay more out of pocket each year when you need to use health services, which could make it difficult to build a balance within your HSA.

 

Second, contributions are limited. Annual contributions to HSAs are limited to $3,400 a year for individuals and $6,750 a year for families. These limits get bumped up by $1,000 for people aged 55 and older. You also may only contribute to an HSA until your retirement age.

 

Finally, HSAs typically have fewer investment options compared with other investment tools, including 401(k)s and IRAs. The accounts often have high management and administrative fees. All this makes building HSA earnings tough to do.

 

The Ugly

Before you reach age 65, non-medical withdrawals from HSAs come with a whopping 20 percent penalty, plus they are taxed as income. Even after age 65, both contributions and earnings are taxed when they are withdrawn for non-medical expenses.

 

In this way, HSAs compare unfavorably with 401(k)s and IRAs, which end their early withdrawal period earlier, at age 59½, and also have lower early withdrawal penalties of just 10 percent.

 

HSAs are a powerful tool to help manage the ever-rising costs of health care. Knowing the rules and the costs associated with using these funds outside of medical expenses can help you position an HSA with your other retirement options. 

Now that summer has arrived, you may find opportunities to combine business activities with pleasure, which could result in tax breaks. Here are five of those potential breaks.

1. Organize a company outing. Normally, deductions for business entertainment and meals are limited to 50 percent of the expenses. However, you can write off 100 percent of the cost of a company picnic or other get-together. Note that you can't restrict the outing to only a select few employees.

2. Take a mini-vacation. If you're traveling on business, you might extend the trip a few days to get in some sightseeing. Generally, you can deduct your travel expenses — including airfare and 50 percent of your meals — if the primary purpose of the travel is business related. But you can't deduct expenses for your side trips.

3. Send the kids to camp. When you send your children who are under age 13 to day camp so you and your spouse can work in the summer, you may claim the dependent care credit for the expense. Usually, the maximum credit is $600 for one child and $1,200 for two or more children. The cost of overnight camp doesn't qualify.

4. Lease your vacation home. If you rent out your vacation home when you're not using it, you often can deduct your rental expenses in full. Deductions are limited to rental income if your personal use for the year exceeds the greater of 14 days or 10 percent of the rental time. Note: There are no tax consequences for a rental of two weeks or less.

5. Fish for deductions. Although you can't claim deductions for an entertainment facility, like a boat, you may still write off 50 percent of entertainment expenses relating to the facility. For instance, if you take a client deep sea fishing after a substantial business meeting, you can deduct the fuel, food, and drinks — even the fish bait.

These are just five possibilities, but it's important to be aware of exclusions and limitations that may apply to your situation.

Burzenski and Company, P.C. 

Is your child thinking about taking on a job for extra money this summer? If so, both of you may have questions about taxes. The following are a few tax tips to help you prepare.

For 2017, your child can earn as much as $6,350 and not pay a dime in federal income tax. If your child's earnings won't exceed this amount, consider having the child claim "student–exempt" when completing the "Federal Withholding Allowance Certificate" (Form W-4). As long as your child's total income doesn't exceed the $6,350 limit, he or she may not need to file a 2017 tax return.

Don't overlook the fact Social Security and Medicare taxes will be withheld from your child's paycheck. While these payments are not income taxes, let your new worker know they will be withheld from his or her paycheck.

Keep in mind that self-employment income, tips, interest, dividends, and stock sales may impact your child's tax return filing requirement.

As long as you provide more than half of your child's support, you can continue to claim the child as an exemption on your tax return. Your child will lose his or her exemption, but that exemption deduction is typically more valuable to you than to your child.

If you need more details about the tax implications of your child's summer job, please call us at 203-468-8133.

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