First Year Dental Practice Tax Questions

2010 was the first year for my practice as a startup, a PLLC. We are showing a big loss.

Does that loss get carried over to my personal return so I get a refund? (I made money working for someone else and money as an employee of the startup.)

You should under the right situation, and I suspect you have the right situation. The question then becomes, do WANT to use a VERY large loss if it drops you into the 15, 10 or god forbid, 0 % tax brackets? Not if you can help it.

Taking losses at the appropriate tax brackets is key. I’ve seen returns where the taxpayer took as much loss as the tax code allowed and created negative taxable income. These taxpayers LOST the benefit of either their itemized or standard deductions along with their exemptions for that year. THOSE deductions CAN’T be carried forward. Depreciation deductions CAN be carried over if done correctly.

Good luck.

Thanks for the reply. I have a call out to my accountant to discuss this.

According to my EOY Statement of Income and Expenses, if I didn’t pay myself any salary, the business would have shown only about a $20k loss. Since I paid myself, it shows a bigger loss than that. I don’t believe that number includes any loan payments or depreciation.

Oh boy, wages? Is the PLLC being taxed as an S-Corp? If so, check to see if you have a tax-basis issue now….generally, without basis you cannot deduct losses…

Yes, taxed as an S-Corp. I’m not sure what “tax-basis” means, but my monthly report does have “Income tax basis” in the title.

Your accountant should know. Basically if you haven’t put any money into the practice (i.e. funded 100% with bank debt) you may not have a tax basis unless the bank loan is in your personal name….

Yes, the bank loan paid for it all. It’s in the practice’s name.

That doesn’t sound promising. If you were looking forward to using some of those losses you should have waited to elect S-Corp. There may be a few little things you can do now, after the fact. Email me after you meet with your accountant and let us know what the deal is. If they say you can’t do anything at this point shoot me an email if you want to chat off-line about it.

This first appeared on Dentaltown.

Send your questions to Tim Lott, CPA, CVA at

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