Physician Tax-Efficient Exit

Minimizing taxes on practice sale

Minimizing Taxes on Your Exit

The tax treatment of your practice sale can vary dramatically based on structure and planning. Ensure your practice valuation is complete before structuring the sale to maximize after-tax proceeds.

Starting tax planning years before your exit allows time to implement optimal structures. Coordinate with your succession plan and estate planning to achieve comprehensive wealth transfer goals.

Tax Efficiency Strategies

LCGE Planning

Maximize Lifetime Capital Gains Exemption through proper share structuring and timing.

Share vs Asset

Compare share sale versus asset sale for optimal after-tax proceeds and flexibility.

Family Planning

Consider family trust structures to multiply capital gains exemptions effectively.

Timing Strategy

Plan the timing of sale proceeds for optimal tax bracket management and savings.

Practice Exit Tax Comparison

Exit Strategy	Tax Treatment	Effective Rate	Best For
LCGE Share Sale	Capital gains with exemption	0% up to $1.25M	Qualifying small business shares
Regular Share Sale	Capital gains (50% inclusion)	~27% on gains	Non-qualifying corporations
Asset Sale	Mixed (recapture + capital)	30-50% blended	Buyer-preferred deals
Capital Dividend	Tax-free from CDA	0%	Utilizing accumulated CDA
Earn-Out Structure	Capital gains spread over time	~27% deferred	Risk-sharing arrangements

Common Mistakes

Starting exit tax planning too late to meet LCGE holding period requirements
Failing to purify shares of passive investments before claiming LCGE
Not considering family trust multiplication of capital gains exemption
Ignoring capital dividend account balance when structuring sale proceeds
Structuring as asset sale when share sale could provide significant tax savings

Keys to Success

Begin exit tax planning 3-5 years before anticipated sale to optimize structure
Ensure corporation qualifies as QSBC by managing passive investment levels
Consider estate freeze to lock in current value and shift future growth to next generation
Maximize capital dividend account through corporate investment strategy
Coordinate with spouse's LCGE to potentially shelter $2.5M+ in capital gains