Maximize goodwill when selling a practice

Q: I'm selling my medical practice, and my attorney advised me to allocate as much of the purchase price as I can to goodwill. Why is doing so advantageous?

A: In the purchase of a practice, all purchased assets are deductible to the buyer and reported as income to the seller.

Generally, a practice purchase is comprised of tangible elements, such as equipment, and intangible elements (goodwill). The purchase of tangible assets usually can be depreciated over a 5- to 7-year schedule, but some may be fully deducted during the year following the purchase.

Send your money management questions to [email protected] Answer provided by Steven Podnos, MD, CFP, principal of Wealth Care LLC in Merritt Island, Florida.