RosieQParticipantStatus: PhysicianPosts: 152Joined: 06/03/2017
Our physician group will regularly make donations to charitable causes. The largest of these tend to be towards hospital fundraisers (almost like a pay to play situation) with 5k here or 10k there that the group pays towards hospital fundraiser gala events etc. Those payments come out of our profit which would otherwise come to the individual providers as a profit distribution. This has been sold to us as something that pretty much all physician groups do, and it makes sense to keep our hospital overlords happy to not lose the contract, but the more mission creep with donations that there is the more I feel like it should be up to the individual partners to donate to their own favorite causes. At the very least, is there a way to take a tax deduction on the percentage of my paycheck that the group distributed to charitable causes or is this only a deduction if the money went to me first before being given away? What are other groups doing with regards to charity donations?January 11, 2019 at 4:58 pm MST #180610ZZZParticipantStatus: SpousePosts: 308Joined: 06/18/2018
Just have a policy of saying ‘No’ to all such requests. You’re a business, not a charity. Individual partners are more than welcome to give their own money to their favored causes. The number of worthy causes knows no end…however, your profits are not endless. If your contract is so tenuous that not making a 5k donation to some event jeopardizes it, well, I guess that’s a different discussion.
If the ‘givers’ in the group (who will castigate you as heartless for ending their ‘generosity’ with other peoples money) want to set up a separate charitable arm funded by voluntary paycheck deductions, they’re more than welcome to do so. Hopefully they’ll be the first to put their own money where their hearts are, but I’ll wager they won’t.January 11, 2019 at 5:17 pm MST #180614jfoxcpacfpModeratorStatus: Financial Advisor, Accountant, Small Business OwnerPosts: 6940Joined: 01/09/2016
The donations will be passed through, proportionately, to all shareholders via their K1’s and deducted, if you itemize, on Schedule A of Form 1040. In some cases, these pseudo-donations are actually M&A costs which should be directly deducted (believe me, I do the same for our firm when we sponsor Little League teams with our logo – 100% w/o). You should ask your group’s CPA how he handles such expenditures. If he is really conservative about this, you may be losing some deductions that you (impo) properly are entitled to.
Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
https://fox-cpas.com/for-doctors-only/January 11, 2019 at 5:43 pm MST #180622jacoavluModeratorStatus: Physician, Small Business OwnerPosts: 1687Joined: 03/01/2018
Like I think Johanna is saying, these donation are already like an invisible “tax deduction” to the owners because the donations decrease the income of the group, so the owners don’t receive (and are never taxed) on those amounts.
The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVAThe White Coat InvestorKeymasterStatus: PhysicianPosts: 4080Joined: 05/13/2011
We’ve had frank discussions in our group to prevent mission creep. Mostly we leave it up to the individual docs.
Site/Forum Owner, Emergency Physician, Blogger, and author of The White Coat Investor: A Doctor's Guide to Personal Finance and Investing
Helping Those Who Wear The White Coat Get A "Fair Shake" on Wall Street since 2011TimParticipantStatus: AccountantPosts: 1480Joined: 09/18/2018
I believe the tax question has been answered. The point you brought up is are these necessary business expenses? There may be cases that “group” feels and obligation and actually benefits demonstrating civic involvement, those are few and far between.
The major one’s with gala’s are actually philanthropic “competitions”.
Someone is hobnobbing. Doing it on your dollar too.
Civic involvement for the whole group? Few and far between.January 12, 2019 at 10:54 am MST #180730jacoavluModeratorStatus: Physician, Small Business OwnerPosts: 1687Joined: 03/01/2018
these things are mostly about maintaining valuable hospital contracts, and the uncertainty of how a “No” would be received
The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVAJanuary 12, 2019 at 11:37 am MST #180757TimParticipantStatus: AccountantPosts: 1480Joined: 09/18/2018
“(almost like a pay to play situation) “
Surely you jest. The corporate practice negotiating contracts has many variables.
jacoavlu summarized some ordinary and necessary donations on your behalf.