Creating a Management Company for Your Dental Practice Requires Careful Documentation of Fees

Documentation is the key: For
anyone looking to create a management company for their dental practice
administrative tasks – Please read:

Income Tax—Intercompany Management
The taxpayer
owned a trucking business that was organized into five wholly owned corporations,
including a single member LLC whose sole business was leasing trucks to the
affiliated entities. The LLC paid management fees of $9,000 per month to the
other entities for consulting, accounting, sales management, and safety and
driver relations. The Tax Court ruled in favor of the IRS in denying
approximately half of the management fees because the taxpayer did not show how
the fees were determined and whether they were at arm’s length. The court was
also not convinced that the fees incurred on behalf of LLC were ordinary and
necessary under IRC Sec. 162. Daniel
Fuhrman, TC Memo 2011-236 (Tax Ct.).

Send your questions to Tim Lott, CPA, CVA at

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