Saturday, November 26, 2011

Using Tax Strategies When Selling Pharmacies in New Hampshire

By Brad MacLiver
Authorship and profile at Google


Industry Roll-Ups are where an industry’s many players are consolidated into smaller groups for economic benefits. NH pharmacy buyers participate in the pharmacy industry roll-up to achieve economies of scale in purchasing, marketing, information systems, logistics, distribution, and top management. New Hampshire pharmacy sellers both independent owners and drug store chains must consider their current market value, recognize the narrowing of profit margins, and realize what their tax consequences will be if they sell.

When pharmacy owners sell their pharmacy in New Hampshire it is considered a capital asset. The difference between the amounts it is sold for and the amount spent to either purchase or start the pharmacy is a capital gain, or a capital loss. In the U.S., all capital gains must be reported and the appropriate tax paid.

Tax strategies can be used to help offset of specific tax liabilities when selling a pharmacy or a drug store. Unless consulting with a professional who handles a large number of pharmacy acquisitions, you will find that they usually do not know these federal regulations that allow for reducing the tax liability for the pharmacy owner in NH.

Many Business Brokers, CPA’s, attorneys, and other professional advisors inform their clients that selling a New Hampshire pharmacy will result in tax consequences. However, most of these professionals do not handle the buying and selling of pharmacies on a daily basis and may not realize the different aspects of structuring a pharmacy transaction allowing the reduction of the tax burden to the NH pharmacy owner.

There are some capital gain tax strategies that must be implemented before any obligation to sell the New Hampshire pharmacy. When a drug store owner is considering selling their pharmacy either now, or in the next few years, it is urgent the best course of action be considered now instead of later.

Estate planning when selling a pharmacy should also be a consideration. Specific federal regulations allow an asset to be converted to an income stream, provide a tax deduction, increase asset diversification, and provide risk reduction, along with offering effective retirement and estate planning. If the NH pharmacy seller is nearing a retirement age, or will be working as a pharmacist for another company, instead of being an owner, then estate planning should also be considered.

As reimbursements are cut, more regulations are applied, and NH pharmacy profits continue to slip, more independent pharmacy owners along with small and regional pharmacy chains will be considering selling their pharmacies and drug stores in New Hampshire. Tax considerations should be a paramount part of the decision process.

Pharmacy owners in NH should consult with a pharmacy industry expert for advice on structuring the sale of their pharmacy. Someone with extensive experience in NH pharmacy and drug store acquisitions will have the knowledge and expertise to structure the transaction for tax considerations. Like all tax planning issues, waiting until the end of the year is not always the best strategy. Following this advice can place larger sums of money in the bank of New Hampshire pharmacy owners when a pharmacy is sold.

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