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Medical group donations

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  •  RosieQ 
    Participant
    Status: Physician
    Posts: 143
    Joined: 06/03/2017
    WCICon18

    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?

    #180610 Reply
     ZZZ 
    Participant
    Status: Spouse
    Posts: 103
    Joined: 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.

    #180614 Reply
    jfoxcpacfp jfoxcpacfp 
    Moderator
    Status: Financial Advisor, Accountant, Small Business Owner
    Posts: 6341
    Joined: 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/

    #180622 Reply
     jacoavlu 
    Moderator
    Status: Physician
    Posts: 1425
    Joined: 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/6cZKVA

    #180635 Reply
    The White Coat Investor The White Coat Investor 
    Keymaster
    Status: Physician
    Posts: 3798
    Joined: 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 2011

    #180643 Reply
    Liked by jfoxcpacfp
     Tim 
    Participant
    Status: Accountant
    Posts: 809
    Joined: 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”.
    https://www.texasmonthly.com/articles/absolutely-farbulous/
    Someone is hobnobbing. Doing it on your dollar too.
    Civic involvement for the whole group? Few and far between.

    #180730 Reply
     jacoavlu 
    Moderator
    Status: Physician
    Posts: 1425
    Joined: 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/6cZKVA

    #180757 Reply
     Tim 
    Participant
    Status: Accountant
    Posts: 809
    Joined: 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.

    #180787 Reply
    Liked by jacoavlu

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