Originally published in Healthcare Michigan, Volume 40, No. 9 Adverse tax issues can arise for physicians and other professional practice groups interested in issuing equity to attract and retain junior physicians. If equity is issued at below fair market value, the new equity owner will incur significant federal income tax consequences on issuance. If the new …
Continued IRS Attack On ‘Zero Out’ Of Profits
A prior article in this publication (IRS Attack on Zeroed Out Taxable Income in Recent Tax Court Cases) discussed the lessons that physician and other incorporated medical practice groups could learn from taxpayer losses in two then recent Tax Court cases in use of the “zero out” technique in the payment of compensation to the …
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IRS ATTACK ON THE “ZERO OUT” IN RECENT TAX COURT CASES
Taxpayer losses in two recent Tax Court cases serve as reminders that physician and other incorporated medical practice groups should take care in the “zero out” approach to the payment of compensation to the group’s owners and that success in this area may depend on whether the practice is organized as a “C” corporation or …
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Caution As To Compensation Paid By Professional Corporations
Two recent Tax Court cases raise caution flags as to the deductibility of shareholder compensation by medical, dental and other professional practice groups organized as professional corporations (PCs) or professional associations (PAs) that are taxed as “C” corporations for federal tax purposes. In each case, on audit, the IRS sought to disallow deductions for a …
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