Tax Strategies When Selling a Dental Practice

The IRS will take 30% to 45% of your sale if you do not plan ahead. Here are the tax strategies that save dental practice sellers the most money.

Asset Allocation Matters

How you allocate the sale price between goodwill, equipment, covenant not to compete, and real estate dramatically affects your tax bill. Goodwill is taxed at capital gains rates. Equipment recapture is taxed as ordinary income.

Key Strategies

• Installment sale: Spread payments over 2-5 years to stay in lower tax brackets
• Maximize goodwill allocation: Capital gains rate (20%) vs ordinary income (37%)
• Opportunity Zone investment: Defer and reduce capital gains taxes
• Charitable remainder trust: For sellers with philanthropic goals

Always work with a CPA who specializes in dental practice sales.