Selling Your Medical Practice Without the Year-One Tax Bill
Physician roll-ups are the biggest M&A trend in healthcare. Privia Health, One Medical (Amazon), Optum (UnitedHealth), Tenet Healthcare, US Acute Care Solutions, Envision Healthcare, Sound Physicians, Surgery Partners, ChenMed, Iora Health, ApolloMD and regional MSOs are all paying 4-8x EBITDA for established practices. A $1M EBITDA practice = $4M-$8M sale.
For specialty practices (cardiology, GI, orthopedics, oncology), multiples run higher (6-12x EBITDA). A $2M EBITDA specialty practice = $12M-$24M.
The math: $5M medical practice sale
Assumes $5M sale, 70% goodwill, 20% equipment, 10% supplies + AR.
Go deeper: selling a medical practice and what physicians keep after tax on Big Sale Tax.
Run your own medical practice sale numbers
The calculator below is preset for a medical practice. Change the price and the allocation to match your offer; it prices the asset sale and the stock sale side by side with 2026 federal law (IRS Rev. Proc. 2025-32), the 3.8% net investment income tax and your state, then shows what spreading the payments keeps you. Full guide: business sale tax calculator.
Your result
S corporation asset sale. You keep $3,113,085 after selling costs and tax.
Where your gain lands
Asset sale vs stock sale
Get the REAL numbers
These are estimates. Have a qualified tax professional run your real numbers in a 15-minute scope call.
Book my 15-minute callThis is an estimate. Getting it right down to the tee takes your actual tax forms (returns, K-1s, depreciation schedules), a consult and a paid analysis. The first 15-minute scope call is free.
Worked example (computed October 13, 2026)
Take a $5,000,000 medical practice (S corporation) sold as assets: $3,500,000 of goodwill, $1,000,000 for imaging, EMR and surgical equipment that cost $1,600,000 with $1,400,000 of depreciation taken, and $500,000 for supplies and cash-method receivables with a zero basis. 5% selling costs, $150,000 of other income, married filing jointly, California. As an asset sale the tax is $1,636,915 and they keep $3,113,085; $1,225,000 of it is ordinary income taxed in year one. A stock sale of the same company would cost $1,477,119. Spread over 10 years, the asset sale costs $1,366,163 in tax: they keep $270,752 more. Interest on the unpaid balance is extra income and is left out.
Medical practice sale tax: questions
Are my practice's accounts receivable taxed as ordinary income?
Usually. Most practices use the cash method, so receivables have a zero basis and whatever the buyer pays for them is ordinary income (IRC §1221(a)(4)), taxed in the year of sale. Enter them under inventory and receivables with a basis of $0.
Does the 3.8% net investment income tax apply when a physician sells a practice?
Not on gain from a practice you work in through an S corporation, partnership or as a sole proprietor (IRC §1411(c)(4)). A passive owner, such as an investor in a management company, does owe it on the gain. Untick the box in the calculator to see the difference.
Medical-practice tax wrinkles
- MSO / Friendly PC structure. Most physician roll-ups use MSO-MSO with a management services agreement. The APA papers the §453. State medical board ownership rules don't affect the §453 mechanic.
- Equipment §1245 recapture. EMR systems, imaging equipment (CT, MRI, X-ray), surgical instruments and exam tables carry high recapture exposure in year one. Allocate carefully.
- Specialty vs primary care. Specialty practices (cardiology, GI, orthopedics) get higher multiples and a higher goodwill % than primary care, so §453 has more to defer.
- Concierge / DPC (direct primary care) model. Different valuation method, often a higher goodwill % due to recurring membership fees.
- Insurance contracts and Medicare provider number transfer. Affects timing not §453 mechanic.
- Stark Law / Anti-Kickback Statute compliance. The sale must comply. Buyer's counsel handles it.
- Receivables collection post-close. Typically allocated to seller; treatment matters.
- State medical board notice requirements vary by state.
What is the tax bill on your practice sale going to be?
Send me the sale price and rough basis. Within one business day I'll email you the actual number and the Seller's Guide to §453. If it doesn't fit your deal, I'll tell you that plainly.
No retainer · no obligation. Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
When this fits
- $1.5M+ practice value
- Goodwill-heavy deal (most MSO deals qualify)
- Sophisticated buyer with M&A counsel (PE-backed platforms have all done §453 before)
- Physician retiring or scaling back (not 100% rollover)
When it doesn't
- Mostly equipment sale
- Solo without team
- 100% rollover into MSO equity
How I work
Hans Goldstein, EA, IRC §453 specialist. Admitted to practice before the IRS. Placements with highly rated life insurers (A or better by A.M. Best or equivalent) in all 50 states. Free 15-min fit-check call. Bring practice EBITDA, equipment basis, prior depreciation, offer terms, residency state.
Frequently asked
Q: My MSO offer is 60% cash / 40% rollover. Does §453 work? A: Yes, on the cash portion. The rollover equity has its own §351-like deferral mechanic. Two layered deferrals.
Q: I'm a primary care doc with ~$400K EBITDA. Too small? A: Maybe. If you can stretch the sale price to $1.5M+ with optional carve-outs (real estate, ancillary services), §453 fits. Below that the math doesn't move the needle.
Q: Do Optum and Privia paper §453? A: Yes, routinely. Their M&A counsel knows the structure.
Find out what your practice sale tax bill actually is, and what you can do about it
No retainer. On a funded structure, the insurer pays a one-time commission of about 4% of the amount structured to the brokerage firm that places it (Hans’s share is about 2.4%; no trail). It is built into the annuity pricing, not a separate fee.
Find out what your tax bill actually looks like before you sell, including the parts your CPA may not raise until the return is already being prepared.
Most people find out what they owe after the sale closes, when nothing can be changed. A short conversation now tells you the number, which layers apply to your situation, and which options are still open while the sale is still in front of you.
- What you will actually owe: federal, the 3.8% surtax, recapture and your state
- Which of those layers you can still do something about
- Whether spreading the sale changes the number in your case
Hans Goldstein · 213-414-2808 · Hans Goldstein: Tax & Exit Planning · This is an educational conversation, not tax advice. Bring your CPA in before you file.
Hans Goldstein, a licensed insurance agent (CA Insurance License #4273294), will contact you and may discuss insurance products, including annuities.
Educational. Not tax or legal advice.
Run your specific numbers
The calculator runs your sale through real 2026 federal + state tax brackets and shows §453 savings vs lump sum side-by-side.
Run the calculator → 213-414-2808