Written by Bryan Martin, CPA, Managing Partner and Founder of Taxstra. Last updated September 1, 2026.
Clean the records before marketing the practice
Reconcile financial statements to tax returns and practice-management reports, support owner adjustments and assemble fixed-asset and debt schedules. Buyers and lenders can move faster when the earnings story survives cross-checking.
- Financial statements and returns
- Production, collections and AR aging
- Supported add-backs
- Asset, debt and lease schedules
Model structure and allocation early
An asset sale and an equity sale can produce different legal and tax results. Within an applicable asset transaction, the allocation among asset classes can affect both parties. Do not leave the allocation to a post-closing accounting cleanup.
- Entity and deal structure
- Purchase-price allocation
- Goodwill and identifiable assets
- Restrictive covenants and consulting terms
Test payment timing and closing deductions
Installment terms may change when gain is recognized, but not every item receives the same treatment. Transaction fees, debt payoff, escrow and working-capital terms also affect cash at closing and taxable results.
- Cash at close and deferred payments
- Debt and lien payoff
- Transaction and professional fees
- Escrow, holdback and working capital
Coordinate the final reporting
The purchase agreement, closing statement, allocation schedule, payroll records and tax filings must tell the same story. Preserve the final signed documents and a closing-basis workpaper for future reporting.
- Final closing statement
- Form 8594 consistency when applicable
- Asset basis and depreciation history
- State and local filing analysis
Questions owners ask
How is the sale of a dental practice taxed?
The result depends on entity and deal structure, basis, asset allocation, depreciation history, payment timing, state rules and the final agreements.
Why does purchase-price allocation matter to a seller?
Different components can have different tax character and timing. The buyer and seller should coordinate the final allocation and required reporting.
Can a dental practice sale use installment payments?
Some deferred-payment structures may qualify for installment treatment, but exceptions and asset-specific rules apply. Model the signed terms before relying on the timing result.