Tuesday

The Tax Act Can Pay You Back... for your New Dental Office?

Rick Epple of Epple Financial Advisors explains how dentists the tax act can pay you back...

Tax Act Encourages Business Purchases in 2009

President Obama signed the American Recovery and Reinvestment Act (ARRA) into law on February 17, 2009. The new law includes significant incentives to encourage equipment purchasing this year. You may be asking yourself, is there any benefit to me? The short answer is “perhaps”. With some quick planning and implementation, you could realize a sizeable benefit.

The Act creates an opportunity for dental practice owners to greatly accelerate cost recovery of qualifying equipment put into service in calendar year 2009. By taking advantage of the provisions, dentists can reduce taxes considerably.

The ARRA extends for one year the small business expensing levels in Section 179, which are very generous. In 2009, a dental practice can expense up to $250,000 as long as its qualified equipment purchases do not exceed $800,000, the amount that can be expensed decreases by one dollar, so that a practice that makes $1,050,000 in total purchases will not be able to expense anything (but could still claim the depreciation bonus).

The ARRA also extended for one year (i.e., through the end of 2009) the 50 percent bonus depreciation first created in February 2008. Dental practices that buy equipment in 2009 will be able to depreciate an additional 50 percent of the costs of assets placed in service this year. Only new equipment is eligible, but “new” has a liberal interpretation.

Key Points and Comments

  • Equipment and qualified property must be purchased and place in service in 2009. There is not much time to complete these types of projects without starting today.
    As happened in 2008, these provisions may be extended another year into 2010. Dentists should not plan on this, but keeping an eye on this provision could help to hit the ground running next year.

  • While the Recovery and Reinvestment Act makes investing in a dental practice attractive, it does not mean the road should be considered wide open. A well thought out analysis and plan of upgrading equipment and the office should be completed to insure the desired Return on Investment (ROI) is achieved.

  • Only equipment and property subject to a less than 20-year depreciation schedule qualifies for the bonus depreciation.

  • By increasing a dental practice’s tax deductions in 2009, the asset expense election and bonus depreciation help trim tax bills in the short term. However, because there will be less to depreciate in the future, the practice’s tax bill in later years may be higher.

  • Dentists need to work with their tax advisors proactively to determine qualifying equipment and property. This includes an analysis of taking the deductions again 2009 income versus waiting.

Section 179 Expensing Summary

  • The 2009 ARRA extended for one year the increased Sec.179 expensing limit of $250,000 and phase-out cap to $800,000

  • Expensing is phased out for each dollar that purchases exceed $800,000

  • Companies with total purchases of $1,050,000 cannot use Sec 179

  • Can be combined with depreciation bonus

  • New and used equipment are eligible for expensing

  • Applies to tax years that start in 2009

  • Sec. 179 expensing levels will drop at end of 2009 unless extended

Bonus Depreciation Summary

  • The 2009 ARRA allows additional first-year 50 percent depreciation of the purchase cost by extending for one year the bonus depreciation created by the 2008 Economic Stimulus Act.

  • Bonus depreciation helps businesses that buy qualified property this year cut their 2009 taxes. Will expire at the end of 2009 unless extended.

  • Applies to purchases of tangible personal property with a MACRS recovery period of 20 years or fewer.

  • Equipment must be new. However, the definition appears to be liberally interpreted:
  1. New qualified leaseholder improvements such as office remodeling projects to the interior may qualify.

  2. Personal property converted to the business may qualify. An example of a property that might qualify would be a car.

  3. Used rebuilt equipment or reconditioned costs may qualify.
  • Equipment must be purchased and placed in service in 2009.

  • Allowed for both regular and alternative minimum tax purposes.

  • Taxpayers need not claim the depreciation bonus, but do have to elect not to.

How It Can Work

The ABC dental practice purchases and places in service equipment (five-year property) and office furniture in its calendar 2009 tax year having a cost of $800,000, which will be subject to the half-year convention. ABC will elect to expense $250,000 under Sec. 179, leaving the machinery with a remaining depreciable basis of $550,000.

Applying the bonus depreciation provided by the Act, ANC is entitled to a further deductionin 2009 of $275,000 (50% of $550,000), leaving the machinery with a remaining depreciable basis of $275,000. Standard first-year depreciation for five-year property under the half-year convention is 20%, providing ABC with further depreciation on the machinery of $55,000.

Accordingly, dental practice ABC is entitled to a total expense and depreciation deduction of $580,000 in 2009 on its $800,000 machinery. The remaining $220,000 cost of the property is recovered after 2009 under otherwise applicable rules for computing depreciation.

Summary

In talking with dentists, the awareness level of the opportunity provided by the American Recovery and Reinvestment Act seem to be rather low. The Act provides tax breaks for dental practice owners to create jobs by making it attractive to invest in their practices.

However, lower taxes should not be what drives the decision making process. First and foremost, the capital improvements needs to make sense from a business and return-on-investment standpoint.

There is not much time to complete the project(s) in 2009 and to benefit from the tax breaks afforded by the ARRA. Therefore, dentists should consult with their tax advisors as soon as possible to take full advantage of the provisions the Act provides.

* Rick Epple, CFP is a member of the Northern Dental Alliance. He is an NAPFA-Registered Financial Advisor, Epple Financial Advisors, LLC, Wayzata, Minnesota. E-mail is Rick@EppleFinancial.com • www.EppleFinancial.com

Saturday

Do You Need Dental Practice Management With Scalable Flexibility?

My goal as a dental consultant is to find the right resources for my clients to achieve success. There are three basic elements that I see as important: flexibility, consistency and pragmatic implementation.

Recently, I was contacted by a person who fit those criteria as well as having the expertise to move forward efficiently for my dentist clients. Her name is Claudia Walters; her consultancy is focused on dental practice management...


Flexible, Scalable and Affordable Practice Management Consulting

Get the experience and flexibility your dental practice needs in this economic environment. Claudia Walters has over 20 years in dentistry and has the expertise to develop the systems required to help your dental office thrive.

Claudia has a flexible dental office program from a financial and logistical standpoint that is also comprehensive and efficient. She is very knowledgeable about dentistry and how dental offices work. She will move you in the right direction with specific objectives and instructions.

With her consultant services, you will end the frustration of an inactivity and low productivity. Improve every office system you have, generate more dentistry, and increase revenues very quickly.

Claudia is a Professional Dental Management Consultant. She has worked one on one with dentists for over 10 years. She was a chairside assistant while attending the University of Detroit Dental Hygiene School.

She practiced dental hygiene for 18 years. Claudia received her management and consulting training from The Goldman Group, Professional Management Consultants and Brokers. Paul Goldman, president of The Goldman Group, has been a consultant in the health care profession for over forty years, and has worked with over fifteen hundred practices in a consulting capacity.

According to Paul Goldman: "I have had the opportunity to know Claudia Walters for twenty years. We trained Claudia for a year before she saw her first doctor. For nine years she worked for me and consulted with over five hundred doctors. I have received a number of referrals from doctors she worked with. If she were interested in moving back to Michigan, I would rehire her!"

Goldman and his chief consultant Henry Bechek, worked with Claudia for one year, on the road in over 100 practices. Subsequently, Claudia traveled on her own as a consultant representing The Goldman Group, to dental practices all over Michigan and Canada. Claudia believes in working one on ore with her doctors, and a team concept with staff.

Her objective is to create a highly productive yet relaxed environment where everyone knows their job description, yet each staff member helps one another. The environment developed will be where the doctor can concentrate on dentistry and feel confident that his dental practice is running smoothly.

Claudia's areas of dental expertise include new patient experience, phone coordinator, appointment book control, case presentation, collections, internal marketing, motivation communication, staff meetings and huddles, scripts, hygiene quarterly reviews, interview process, tracking progress, and more.

Claudia has been published in Dental Management and RDH Magazine and has designed a 4200 square foot office from the ground up. She is also listed in Who's Who in the World.

While currently located in southern California, she consults with dentists, dental teams and dentistry practices coast to coast via Skype video or in person.
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For comprhensive dentistry communication consulting and dental marketing coaching, contact Dick Chwalek of Niche Dental.

866-453-1026 Ext 251

Friday

Dentists on TV & Radio: Be Seen, Be Heard, Be Profitable

Matt Wagner, Owner of
RADIO & TELEVISION EXPERTS, LLC…“I have helped dozens of clients in many industries run successful campaigns on radio. That's my best niche. Through use of testimonials, jingles, dialogue spots and well placed schedules, I've maximized dollars and results. I can truly give neutral, unbiased advice on the best stations to use (unlike stations who will always steer you their way).”

A Few TV/Radio Campaign Answers...

How much does this cost?
It depends on what market you are in – the size of each radio stations approximate audience, coupled with demand on advertising inventory are what dictate rates. In addition, rather
than buying 20-30 commercials at random times, we narrow down the time frames considerably so dentists like you standout during peak times when the most amount of listeners can be impacted.

How long until I start seeing results?
In some cases, we've had responses the first day, but I ask for 8-12 weeks before we start gauging results. Radio and TV are different than other marketing. The audience has to transfer from ‘hearing’ you to actually ‘listening’ to you.

The beautiful thing is, once that happens, you'll get new dental patient referrals from people who have never met you, but only know you through media. If after 8 weeks you don't see noticeable results, I take a closer look and make any necessary adjustments. I don't like to lose, especially since it's hard to re-convince an audience.

How does R.A.T.E. make money?
As an Advertising Agency, I am awarded a discount from the media for bringing them the business – that is my compensation.

Get More Answers By Contacting Matt…

Matt Wagner of Radio And Television Experts LLC (R.A.T.E.)
Matt is a 16-year veteran of radio, has won national sales and writing awards and has created
for dentists practicing general cosmetic dentistry as well as sleep sedation dental treatment. Wagner will identify the best stations, negotiate the most effective times, and create compelling ad copy at no additional charge to what the radio would normally cost.


Radio And Television Experts, LLC
Matt Wagner - Owner / Founder / Head Media Coach
Direct Line: 580-512-0351
Email: MW@RadioAndTelevisionExperts.com

1146 NW Cache Rd
Lawton, Ok 73505


Collaborate for success, visit NicheDentalCollabarate.com