Seller Resources
A 1031 Tax-deferred Exchange is one of the last tax shelters allowed by the Internal Revenue Service. It is a transaction in which a taxpayer exchanges investment property for like-kind property and defers the payment of capital gain taxes. There are important rules which must be followed to effectuate a valid exchange.
You may transfer certain assets used in a dental practice to a Buyer and, at a later time, acquire certain assets to be used in a replacement dental practice. For more info visit:
http://www.exchangeresources.net
Knowing that exchange transactions can be complicated and sometimes frustrating, we encourage you to contact our office should you have any questions or concerns. Taxpayers should always consult with their own accountant or tax attorney to obtain legal and tax advice.
TAX RAMIFICATIONS
Please be sure to contact your accountant for updates and changes in tax law and to plan your tax liability strategies.
| Allocation of Purchase Price for a Dental Practice | |||
|---|---|---|---|
| Item | Seller | Buyer | |
| 1 | Equipment, furniture and fixtures | Ordinary income (recapture over basis) | Depreciable for a term of 7 years |
| 2 | Leasehold Improvements | Ordinary income | Useful life depreciable 38 years |
| 3 | Leasehold Fixtures | Ordinary income | Depreciable over term of lease. Doesn't include options |
| 4 | Interest in lease | Capital gains | Depreciable terms length of lease |
| 5 | Supplies and consumables | Ordinary income | Depreciable expense term of sale |
| 6 | Covenant not to compete | Ordinary income | Depreciable over 15 years |
| 7 | Patient Records | Capital gains | Depreciable over 15 years |
| 8 | Goodwill | Capital gains | Depreciable over 15 years |
