Todd Eury: pharmacy podcast nation, you know it's a good day for me when I get to have pharmacists in.
Todd Eury: Action in presentations with me, but today is a subject that I need a lot of help on because if you want tax advice, do not come to me to ask for that tax advice, because i'll probably get you in trouble, just like if you're a pharmacist.
Todd Eury: Give the pharmacist your attention for clinical information once again don't come to me i'm a good parrot i'm probably one of the most intelligent parents in the pharmacy industry.
Todd Eury: But for clinical and tax that's not my bag of tricks, it has to be the experts, and today we are bringing on several experts, as well as a pharmacy operator and owner to this podcast which is brought to us by Ark safe.
Todd Eury: Ark safe has been an amazing partner of our network bringing content to us and we're doing this in two different ways you're seeing us live on a webinar.
Todd Eury: As well as accessible through a YouTube page that will be repurposing this content and then, if you're listening to the audio form.
Todd Eury: We very much appreciate you if you think there's another pharmacy owner out there.
Todd Eury: That would like to listen to business information it's brought to us by trusted professionals.
Todd Eury: Who are deep into helping pharmacist and pharmacy owners manage their money and finances better please share this podcast with them.
Todd Eury: Without further ado, I would like to introduce our panel today i'm excited about this, because one of them is a brand new member of the pharmacy podcast network, and that is Mr Derek delaney he has an amazing podcast called farm D money welcome Derek to this presentation.
Derek Delaney: Thank you Todd i'm happy to be here.
Todd Eury: Also, no one is gonna is going to miss out on this name this this guy is just synonymous and tagged in and plugged into all things financial for the world of the pharmacy owner.
Todd Eury: The sykes family have been producing some amazing content on their YouTube channel I educate myself on that and share that content.
Todd Eury: All insights founded sykes and company I don't know how many years ago to get your input Scott, but Scott, you are the son of olin and i'm so glad that you're here to help us navigate this subject today.
Scott Sykes: yeah glad to be here, thank you for having me my dad I think we started about 35 years ago Todd and i've been on board about 10 or 12 years.
Scott Sykes: And so it's been it's been a fun ride ever since so we're just glad to be here.
Todd Eury: Thank you so much you guys are the goats of the CPA world of Community pharmacy and pharmacy business so.
Todd Eury: Thank you so much, should we couldn't have a presentation we couldn't have one of these events, without a pharmacy operator owner here, I want to introduce amy schumer to the pharmacy podcast nation in this presentation amy thanks for being here.
Aimee Stuermer: yeah happy to be here.
Todd Eury: First of all, i'm going to start out with amy tell us your pharmacy location and the setting of your pharmacy the mix between patients in the Community, setting or if you're doing some Assisted Living or even specialty kind of give our audience a little information on your background.
Aimee Stuermer: yeah, so I am a pharmacist and the owner co owner with my husband of medicine man bonners fairy pharmacy and monastery Idaho right on the Northern tip right next to Canada.
Aimee Stuermer: And we're are located inside of a grocery store pretty small pharmacy 600 square foot and we do basically retail pharmacy, but we also do.
Aimee Stuermer: See packaging and we do MED think we do Assisted Living living as well, but will package for that yeah the most part, a little bit of compounding but not much more Thank you.
Todd Eury: If you're listening to the podcast and you're not getting the visual amy has a.
Todd Eury: An Ark safe technology, a machine right behind her, and I said to Derek before we started recording it looks better than a Christmas tree it looks i'm in the Star Wars guys in science fiction, so I absolutely love stuff like this, but it looks great.
Todd Eury: So today subject once again it's just amazing how intense, it is to run a Community pharmacy independent pharmacy and.
Todd Eury: The guidance that we're going to get from this panel is so important and and I think it's necessary coming to the end of the year.
Todd Eury: Where we get an opportunity to listen to some strategists to dig into what is section 179 and how does this benefit the business of pharmacy so i'm going to start out with with Scott, if you could kind of elaborate and set the stage what is section 179.
Scott Sykes: Section 179 is an area of tax law here where essentially.
Scott Sykes: Congress wanted businesses to be able to purchase equipment and get and get in stimulate the economy with the purchase of equipment and so what they did is they.
Scott Sykes: Introduce section 179 in the tax law that essentially allows pharmacies pharmacy owners in this particular case, to essentially right off up to 100% of that.
Scott Sykes: purchase price in year one, and even if you finance that, for example, we're talking about a robot here, even if you finance that robot you can essentially write a write off or deduct up to 100% of that robot cost in year one so very valuable tax benefit there from a tax planning perspective.
Scott Sykes: and skin substantially reduced taxable income and save you some taxes for sure.
Todd Eury: Thank you Scott so Derek when I think of what you've laid out on farm D money and many of the podcasts that you've put out.
Todd Eury: I understand that there are those nooks and crannies of tax strategy that can become very confusing how have you leveraged and or, can you tell us any stories about the strategy that you might present one of your clients with regards to section 179.
Derek Delaney: yeah so like you mentioned earlier Todd I think it's always extremely important to work with people who are professionals in the specific industry you're looking to dive into.
Derek Delaney: So when it comes to 179 I have a lot of clients that I shouldn't say a lot, but I had some clients that experience that and had the opportunity to take advantage of it.
Derek Delaney: and the first thing we do is we always collaborate with their CPA, so I think it's always important to make sure that you deal with an expert who understands this more than.
Derek Delaney: anybody else in our world essentially.
Derek Delaney: One of the big strategies we use.
Derek Delaney: Or at least that I have been a part of with pharmacy owners, is to really.
Derek Delaney: bring down their tax bill in a year that allows us to do something else in that year because of that lower tax bill if that makes sense.
Derek Delaney: Because again everybody knows here that 179 is not eliminating that tax it's basically pushing it out farther into the future.
Derek Delaney: Where when you end up selling that piece of equipment you'll have recapture issues and stuff like that, but in the year of taking 179 it allows us to do other unique things from a planning standpoint for those pharmacy winners.
Todd Eury: That brings me back to amy you're the one that we're caring about and worried about as a business owner and so much of the intensity of Dir fees and insurance and employment costs and.
Todd Eury: Just managing your inventory and really navigating when is it time to pull the trigger on larger purchases and how can you use section 179 to.
Todd Eury: mitigate the impact of that cost of that piece of equipment for example amy Can you give us an example how your husband and you may have used one section section 179 in the past, and you know what the outcome was just from a story perspective.
Aimee Stuermer: Yes, um we actually our clients have Sykes and company, so they are our experts and they every at the end of every year and asked us to make a meeting with them and go over our tax management planning.
Aimee Stuermer: To see what kind of facts do will have at the end of the year, come tax season so.
Aimee Stuermer: Each time we do that, they generally say Oh, is this the time to pull the trigger and maybe get a larger purchase so that we can try to mitigate that tax.
Aimee Stuermer: amount that we have to pay and just even I believe I got this machine that stays behind me July of last year, and so it was the previous tax season that they recommended that we make a large purchase and it definitely helped us with not having to pay as much in in tax so.
Todd Eury: Scott, what are some other examples that you can give us for owners that are interested in using a section 179 tax strategy.
Scott Sykes: yeah so you know you have section 179 which can be used for machinery equipment point of sale systems.
Scott Sykes: and potentially some improvements as well to the pharmacy if you're making improvements to the inside of your pharmacy.
Scott Sykes: You certainly could have some opportunity there was 179 and writing everything off the key thing about section 179 it's very flexible, so you can.
Scott Sykes: let's just say you purchased $100,000 robot, for example, you can essentially right off $100,000 of it near 171 79 or you could just say i'm only gonna write off $50,000 this year and just and then the other 50 you write off over a period of time.
Scott Sykes: So 179 is very flexible in that regards but you also have what what what's out there is called bonus depreciation, which is very similar to have section 179, but it has its advantages as well.
Scott Sykes: In that you can actually create losses in a lot of a lot of instances with bonus depreciation and we're talking about tax planning which amy just touched on.
Scott Sykes: If you're able to create some losses and plan around those losses.
Scott Sykes: You could potentially offset other income and other areas, thereby reducing your tax bill so there's a lot of planning that can go on here with 179 and bonus depreciation and i'll also add there that your state tax differences are very important when determining with your professionals.
Scott Sykes: Which is, which is a better option, whether it's that bonus or 179 so lot of planning thing can go into that but you've got a myriad of options here for pharmacy owners.
Todd Eury: So I don't want to put you in boxes, but when I think of Derek versus Scott i'm thinking of Eric focusing on the individual and the income.
Todd Eury: capacity to be able to take full advantage of what that individual is making to set them up.
Todd Eury: For a great retirement, for example, and then I look at Scott as managing the health of the entire operations and business.
Todd Eury: or better yet multi businesses, because we have pharmacy owners that are listening to this presentation, right now, who have 356 12 locations and.
Todd Eury: That starts to become really complex when I think of that Derek can you kind of give us an examples of timing and in thinking of the individual outcome, the owner physical their physical income and how this might play into timing and using section 179.
Derek Delaney: yeah so on the the I think you hit it right on the head tab where I focus more on the individual and family planning, when it comes to the pharmacist and usually leave the business side to people who specialize in that like Scott and his firm.
Derek Delaney: But one of the big things that pharmacy owners.
Derek Delaney: are confronted with we're had the opportunity to be more efficient, with is the cash flow within the year that gets saved or that cash flow opportunity that's there because of.
Derek Delaney: Section 179 and that's always an interesting thing that I wondered is if it's more important for a business owner and a pharmacy to.
Derek Delaney: buy a big piece of machinery at the beginning of the year, knowing they have that big.
Derek Delaney: appreciable asset that they can use to offset other income they know they're going to experience later in the year, which means maybe they have to pay less than quarterly is and if that's the case.
Derek Delaney: They have more free cash flow to take advantage of other things throughout the year that may help them on the personal side.
Todd Eury: i'm not sure who to answer to ask this question to so i'm going to ask the question and then someone out of the three of you.
Todd Eury: And that is i'm thinking of the pharmacy owner who's thinking of selling their business and what impact this has on their operations so.
Todd Eury: Would it be Scott, to ask you so i'm a pharmacy owner, I have three stores i'd like to sell off one of those stores, I wanted to purchase some equipment, before the end of the year, is there any implement implications to that in that story or that that setting.
Scott Sykes: Certainly anytime you're going to sell a business, whether you're going to sell the stock or the assets.
Scott Sykes: And you own multiple pharmacies there's a lot of planning that goes in around that so that's a great question, obviously, the answer is going to be yes, there.
Scott Sykes: Depending on the situation, what you're selling again rather stock or assets which assets are you selling so on and so forth, so there can certainly be implications to these aggressive write offs and in terms of recapture fee, you may have to pay.
Scott Sykes: Essentially recapture that appreciation you've already taken and in previous years, for example, so there there's a lot of planning that goes into that for sure absolutely.
Todd Eury: Any what concerns do you have as a pharmacy owner with regards to purchasing let's say you came to scotty and to sykes and you say listen.
Todd Eury: we're expanding and we want to start delivering more maybe in a wider area and we and we're going to need some vehicles have you ever utilize this approach section 179 for delivery vehicles.
Aimee Stuermer: I have not, it is in our radar though it is something that we're thinking about doing in the near future so definitely something i'm interested in.
Scott Sykes: yeah i'll just chime in there.
Scott Sykes: Todd there's a lot of opportunity with vehicles obviously here.
Scott Sykes: You know, you can use 179 for vehicles, and you can also use that bonus depreciation I mentioned, which is actually 168 K section 168, which is the bonus depreciation there's a little more aggressive can be for vehicles, because there can be some limits with the 179 when it comes to vehicles.
Scott Sykes: But you know if if you can get a vehicle bill and, believe it or not, they want you Congress wants you to purchase large vehicles over 6000 pounds, because the depreciation.
Scott Sykes: is much more aggressive on what you can write off there, so they want you to purchase those trucks and SUVs essentially and to get that more aggressive depreciation so.
Scott Sykes: Again, a lot of flexibility there with vehicles and the opportunity is certainly there.
Todd Eury: So what about the world of pharmacy owner or the scenario per se, of a pharmacy owner wanting to expand a physical location so i'm really curious about commercial property that is the pharmacy owner wants to purchase another location, how does 179 fit into this.
Scott Sykes: i'm glad you asked this question, this is a great question so there's.
Scott Sykes: If you if a pharmacy owner owns a building or is purchasing a building the the rule of thumb is what you will, typically hear from the CPA and an attorney has to put that in a separate llc.
Scott Sykes: And when you do that it's it's what they call a passive entity, if you will.
Scott Sykes: And when you have a passive entity, if you have losses with passive entities those losses, you cannot use against active income, in other words the pharmacy income, you can offset.
Scott Sykes: Whereas if you if that building is inside the pharmacy entity itself, you have an escort pharmacy and you put that building in the name of the pharmacy there.
Scott Sykes: It becomes an active building, if you will, and a building is typically depreciated over 39 years, which is an extremely long period of time.
Scott Sykes: But there's cost segregation studies that will allow you to take that building costs let's just say it's a million dollars and they will break down the building costs into individual components and those individual components electrical fixtures lighting.
Scott Sykes: can fall into these smaller, more smaller buckets that you can then use 179 and bonus depreciation to write off in year one a large portion of that building.
Scott Sykes: So you might be able to take a million dollar building and put $400,000 into these other buckets where you can use 179 and bonus to write it all off in year one and create a $400,000 right off in year one.
Scott Sykes: Essentially wiping out income, creating maybe some losses there to offset other income so on and so forth, so.
Scott Sykes: buildings is a huge opportunity for pharmacy owners when we're talking about 179 and bonus depreciation it's just how you got to speak with your advisors, to make sure it's set up correctly, so you can take advantage of of those cost segregation studies.
Todd Eury: So this this next question Derek isn't necessarily about 179, but I am thinking of the pharmacy owner who's listening, including amy and her husband, and that is, you know.
Todd Eury: What if I had a stellar year i've given myself a salary of X number of dollars, I know i'm going to have some.
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Todd Eury: Income that's going to be maybe unusual for the year, for example, with the pandemic we've seen more health care services, you know being utilized by.
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Todd Eury: The Community by people that are being served by pharmacies, do you ever give an advisement to be taking that over the the income that the pharmacy owner is used to or the pharmacist is used to and putting it into some kind of investment.
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Derek Delaney: yeah well from a tax planning standpoint, if you find yourself in in your regular year where you're earning or getting compensated, a lot more than in previous years.
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Derek Delaney: it's important to look at ways in that year to reduce your taxable income so real common strategies, there would be to make contributions and traditional iras.
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Derek Delaney: However, we're in a tax environment right now on the personal side that's pretty good compared to historical tax rates, especially on the the federal income tax bracket side and these preferable rates could be going away here in a couple of years if these.
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Derek Delaney: tax cuts that were enacted back in go away started in 2026 So even if you find yourself with a higher income in a given year than what you anticipated.
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Derek Delaney: It may make sense not to defer that income into something like a traditional IRA and not pay tax on it now.
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Derek Delaney: It may make sense to actually throw it into a Roth IRA take your tax it now, knowing that you could potentially being a higher environment later on in life so it's all about that balance of.
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Derek Delaney: What you think your tax liability is going to be this year, do you want to lower compared to what we think your tax liability could be 567 years down the road in making the best judgment call at that time with those two considerations in mind.
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Todd Eury: Derek thanks for that you know, I was thinking as you were saying that back to.
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Todd Eury: One of the points that Scott made and amy, that is, the the world of improvements, once the last time that you made significant improvements to your pharmacy operations your pharmacy environment and talk about that with regards to tax planning for the end of the year.
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Aimee Stuermer: So I would say, the most recent would be the rapid pack, the rapid pack or X that i've got in July of I guess would be 20 1920 yeah 2020 excuse me yeah July of 2020.
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Todd Eury: we've got his bed it's all like blurring because.
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Aimee Stuermer: It is such a blur.
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Aimee Stuermer: that's, the most recent when we've done but we've done other ones in the past as well purchasing that Parada.
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Aimee Stuermer: Counting in the Max counting file counting machine as well, but it definitely was helpful in our tax mitigation to to help just really put the money where we wanted to put it, and not necessarily towards tax planning and things like that.
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Todd Eury: scotty What about the improvement side of things so i'm a pharmacy owner, I know that the maybe I don't have a drive thru, for example, and I want to add on some actual some major structure that's going to be pretty expensive, can you kind of expand upon that aspect of this benefit.
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Scott Sykes: If you are adding or enlarging a building or mess, with the integrity of the structure of your building you could run into some limitations there as far as aggressive write offs with with bonus depreciation or 179.
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Scott Sykes: So any any anytime you're enlarging your building or adding on to your building you definitely need to speak with your advisors.
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Scott Sykes: To make sure that you're you're going to maximize your situation there from a write off perspective because there can be some limitations there.
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Scott Sykes: And let me just say that in any anytime you were talking about depreciation here, and then, once you've added bonus depreciation, and especially as we get towards the end of the year.
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Scott Sykes: Then the equipment that whatever you're purchasing the capital asset you're purchasing has to be put into use in the year you're going to write it off so.
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Scott Sykes: You have to be able, for example, with a robot you know you can have it installed there the last day of the year, but you you better be able to run a prescription through there to show that it was in use that's going to be a very important detail there.
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Todd Eury: So I purchased a rapid Pack on December 30 I better get it.
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Todd Eury: pumping out a prescription first right.
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Scott Sykes: yeah exactly.
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Todd Eury: Very good, well don't wait if you're listening to this.
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Scott Sykes: yeah, this is not the time to get going yeah.
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Todd Eury: let's call sykes and in and find out how to how to work this best and make sure that it works for the.
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Todd Eury: pharmacy owner, I have such a big heart for pharmacy owners and what they do for their communities and how taxes can be so stressful I know myself when I launched 100% of my income coming from the publication and.
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Todd Eury: That the tax experience that I had in.
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Todd Eury: You know year was a nightmare and it's still a nightmare actually still owe taxes, so I actually need to get a hold of.
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Todd Eury: Another plan or just just just the environment that i'm in it's so different, so I think of amy and your team and your operations and in what you're doing and how you're growing.
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Todd Eury: Where do you see pharmacy owners, making the big biggest mistakes, what are the common mistakes that are taking place in tax planning and when they should or should not be using section 179 Scott.
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Scott Sykes: that's a great question one of the the biggest hindrance to any tax planning is to be the accounting, if you do not have the accounting system fundamentals in place you don't know where you stand and if you don't know where you stand, you cannot tax plan.
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Scott Sykes: So that that's always rule number one always will be, and you'll never hear us stop talking about that, so the fundamentals, have to be there.
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Scott Sykes: When you have the accounting fundamentals and you have a new know exactly where you stand month in month out, you can then put together projections put together models and strategies.
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Scott Sykes: To to offset hopefully any tax liabilities and improve the cash flow and the pharmacy because you know tax planning is all about cash flow.
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Scott Sykes: And gate keeping more cash in the pharmacy and in the pockets of the pharmacy on or so, which we all know, cash is king and pharmacy so very important piece tax planning is, but you got to have those counting fundamentals, first and foremost.
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Todd Eury: So My other question that i'm thinking about is the world of employees and how I may need to take.
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Todd Eury: An opportunity to hire more people, based on my workload, whether that be technicians, or people at the front counter customer service or the most expensive of those employees, maybe another pharmacist.
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Todd Eury: How does tax planning and is there any benefit in the world of 179 if I hire a new employee, especially the most expensive ones Scott is there any is there any way of showing losses in that manner.
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Scott Sykes: hiring employees would not be impacted whatsoever by us one section 179 or bonus depreciation settings so that would be completely separate and distinct now there are could be potential credits involved around hiring.
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Scott Sykes: there's there's there's a few of them out there, like hiring a veteran or something like that, but.
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Scott Sykes: completely separate and distinct there as far as depreciation and hiring.
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Todd Eury: Very good, so what are you thinking about amy and in this coming year 2021 and closing out is there anything that you're planning to do for your pharmacy that you could leverage this tax strategy.
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Todd Eury: For your own pharmacy.
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Aimee Stuermer: yeah For just this year, we have decided to upgrade and get the newer versions of the icon counting film machines, so that was one of the updates that we made we haven't had our tax planning meeting with sites, yet, but we will very soon here so that's kind of what we're looking into.
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Todd Eury: Is there minimums that I have to spend as a pharmacy owner, in order to get this benefit Scott, you mentioned $100,000 purchase or more.
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Todd Eury: And that's easily spent when i'm talking about some you know higher level of automation and systems, even new pharmacy software systems can be quite expensive, can you tell me if there's limitations.
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On the section 179.
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Scott Sykes: Section 179 does have some limits, I believe the right off limit is 1,040,000 so it's not really in the ballpark for many pharmacy owners.
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Scott Sykes: BONUS appreciation of limits as far as that's concerned so.
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Scott Sykes: For the for most nine out of 10 pharmacies not going to be a problem, any limits whatsoever.
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Todd Eury: If the attendees have any questions that they'd like to ask this panel, we can definitely put them you could raise your hand we can have you.
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Todd Eury: be pumped become part of this conversation I think of navigation of the money that's coming into an operation what money's going out as an expenses and, more importantly, where deductions can be made for.
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Todd Eury: end of year it's you know, by the time we get this this presentation out, it will probably be early November so i'm thinking we have less than 60 days to make some new moves.
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Todd Eury: Scott when is the best time to actually get started in order to get into the section 179 benefit is there a I know we were talking about.
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Todd Eury: putting it into the the device into action in on December 31 but that seems like there's a lot of risk in waiting to that that you know length of time amy made comments about purchasing a piece of equipment in in July what's your advice with regards to timing.
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Scott Sykes: sure you know we're at the ncaa conference, a few weeks ago, and you definitely could hear the supply chain issues impacting a lot of the vendors there and including equipment and so.
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Scott Sykes: In fact, we heard one vendor say it's just not going to happen this year if you if you go ahead and place your order now it's not going to happen this year so.
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Scott Sykes: Certainly, you want to get in line now sooner rather than later if you're looking to.
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Scott Sykes: Put that equipment and use and get that tax benefit in this current year, you know the equipment can be new or used in many cases can be new or used equipment so used equipment for the pharmacy.
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Scott Sykes: could still be eligible for that 100% right off whether that's 170 900 appreciation, as long as it's new to you if it's a piece of used equipment, but it's new to you.
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Scott Sykes: You can still get that um that for right off so something to keep in mind, there may be a perhaps a secondary market that's out there for some equipment.
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Todd Eury: So you mentioned ll sees if I have three pharmacies and they're each labeled under a different llc can I sell equipment between those three locations and take advantage of the benefit.
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Scott Sykes: related party issues that's going to fall under the related party issues and you're going to run into a roadblock there, so not gonna not gonna fly.
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Todd Eury: Not gonna lie, we have a question from one of our participants that says that they're selling their pharmacy and they wanted to use something called 1031 exchange do you actually know what that stands for and how to answer that question.
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Scott Sykes: that's a 1031 exchange real estate is really the big.
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Scott Sykes: area involved in that.
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Scott Sykes: We do not specialize in 1031 exchanges, if that need arises, obviously we bring in specialists in that area, it is, it is a unique area for sure.
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Derek Delaney: And I think it's important to note to that 1031 exchanges basically defer your tax liability on the sale of that business or that property.
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Derek Delaney: Which right now you want to be very careful about doing that, with the possibility of capital gains tax increases happening in the future so that's something you're going to want to be aware of, if you think at 1031 could be something you want to take advantage of moving forward.
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Todd Eury: Thank you, Derek that's a really good point.
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Todd Eury: We have another pharmacy operator that has a question that says their income is reduced by the expense cost of the purchase alone, but a right off of the depreciation also hits the income remaining so is that the case is there.
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Todd Eury: You know the right off of the depreciation also hits the income that's remaining.
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Scott Sykes: i'm not sure I fully follow that but uh you know example again if you have that hundred dollar $100,000 robot, for example, you're essentially going to have a expense of $100,000 if you are going to take advantage of the 170 dollar.
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Scott Sykes: BONUS depreciation options out there yep.
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Todd Eury: there's a second part of that question, which is so if you're trying to reduce your income by buying a robot that cost $10,000 could raise could result in a $10,000 indirect tax write off and then also corresponding in separate decreasing that income.
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Scott Sykes: Well, the $10,000 in that example would be a write off decreasing your taxable income your.
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Scott Sykes: I hope that answers that question.
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Todd Eury: We can actually follow up with you to Scott and and please there's going to be contact information in our show notes for all of our participants in this.
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Todd Eury: panel, so that you can reach out to Derek Scott and and amy through linkedin connections so just be aware of that, I think that there's.
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Todd Eury: A lot of pharmacy owners that are looking to change some of the services that they're providing that aren't attached to.
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Todd Eury: Reimbursement models not attached to medicaid not attached to some private insurance, maybe something that's cash based, for example, we hear.
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Todd Eury: A lot of pharmacies starting to think of the supplement world as well as the veterinarian opportunity for pets and pet meds.
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Todd Eury: Is there anything in starting a new line if you invest money into let's say marketing materials or fixtures or something to support that new line that we can take advantage of Section 179.
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Scott Sykes: Great question uh you know you're going to have your expenses normally associated with adding any new business line, for example, if you are investing in capital equipment.
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Scott Sykes: piece of equipment, for example, you could potentially take advantage of the 179 opportunity there, but you could also run into research and development, tax credit opportunities there as well, when you're introducing a new business line.
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Scott Sykes: So he great question lot of opportunity there with with everything, especially obviously going to cash based revenue which can be very beneficial for pharmacies.
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Todd Eury: So let's talk about real quick and review just for the audience for our listeners if you're listening via the webinar on YouTube or on pharmacy podcast.
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Todd Eury: Qualified property, so I want to go through these heavy equipment which I don't know if that necessarily fits pharmacy it says certain vehicles.
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Todd Eury: machines tangible personal property office equipment office furniture computers software, obviously I think that's where we have our pharmacy automation playing in through.
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Todd Eury: Purchasing systems through our safe and then it says certain improvements to qualified real property Scott i'd like to go up above and in jump into the certain vehicles what's that mean by certain vehicles.
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Scott Sykes: Are you is this i'm guessing you're looking at the 179 eligible property there yeah so certain vehicles certain some vehicles won't count how I don't know what they are off the top of my head.
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Scott Sykes: I really don't know but it doesn't apply to pharmacy so I can tell you that, so your your delivery delivery vehicles and a pharmacy is is going to be eligible for the 179 this the certain vehicles those exceptions don't apply to pharmacy.
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Derek Delaney: Scott correct me if i'm wrong, but with that too, if you use that vehicle for more than 50% for personal use then you're excluded from taking 179.
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Scott Sykes: Yes, that's a great point Derek, thank you for bringing that up.
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Scott Sykes: The to take these aggressive depreciation, you have to use at least 50% of it for business, use and.
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Scott Sykes: there's different ways of handling that if it's not 100% business use so do keep that in mind, and that that's a good point there.
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Todd Eury: amy are you and your team using delivery vehicles, right now, of your own.
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Aimee Stuermer: Not at this moment no we don't do enough to really warrant it, but it is something that we have on our radar.
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Todd Eury: OK, and now, this is the the, the one that I wonder, the most about, and this is listed, once again, as you caught me reading from the 179 descriptions Scott, but what is tangible personal personal property.
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Scott Sykes: that's going to be the equipment's the office equipment things like that the tangible property you're this this pill counter amy was talking about those kinds of things.
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Todd Eury: And then, obviously, if I have a new Center that i'm setting up a section in my pharmacy.
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Todd Eury: Where I may be doing a counseling Center or I hired a nurse practitioner to come in and start doing some work for almost like a minute clinics SEC section that's fixtures that's office that's like office furniture per se that's all included too right.
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Scott Sykes: Yes, Sir yep very good.
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Todd Eury: What type of other creative ideas do you have to share with pharmacy owners who are listening in right now that play into using section 179 have I missed any of the categories.
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Scott Sykes: i'll just say well bonus depreciation, it is because the one setting united gets a lot of talk a lot of talk, but the bonus is also extremely powerful and again, you can.
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Scott Sykes: Create losses and some instances where bonus, and you need to understand the state differences there with your advisors.
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Scott Sykes: But the rule of thumb with any pieces of equipment capital equipment is you know you got to put the economics first does your pharmacy actually need this equipment, does it make sense in your pharmacy or you can be able to use it.
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Scott Sykes: to benefit your pharmacy so on and so forth, and the depreciation is kind of the tax benefits is a second and sometimes we.
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Scott Sykes: We see where I got this tax bill, I need to buy something and it's a you know shouldn't shouldn't be like that so always put the economics, first in your pharmacy, then the tax.
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Derek Delaney: I think I think that's a great point, because I think that's, the first thing people don't think about that they should.
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Derek Delaney: Especially when they get to the end of the year, where they think i'm going to have a tax bill I should go out and buy some something that's going to help my business and get that.
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Derek Delaney: Get that deduction in all actuality I have found plenty of times we're not doing that.
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Derek Delaney: Paying your fair of shadow taxes and keeping that cash available to you in a future year could be far more beneficial than getting the deduction in that current year, but I don't think a lot of business owners, think about it that way, which they should.
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Todd Eury: Absolutely glad you mentioned that Derek Derek and and kind of closing out today can you give our listeners just a an overview on what candidate and what.
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Todd Eury: What individual would reach out to farm D financial planning in utilizing the services that you provide.
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Derek Delaney: yeah so like we mentioned before pharmacy financial planning is built for pharmacists and their families, more on the personal side, so if you're looking for any sort of business advice or more of a CFO service that's a phone call you want to make to Scott and his company.
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Derek Delaney: Anything on the personal side, where you're thinking about retirement or college planning or just investment management or other personal income tax.
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Derek Delaney: Problems you may be experiencing that's something that my firm and I specialize in we could help clients with that if that's something they feel would be beneficial for their situation.
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Todd Eury: and closing out the conversation amy do you have any advice for pharmacy owners listening in right now and it doesn't even have to be about taxes is there anything that's happened over the year that you've realized as a pharmacy owner that you could give some insights.
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Aimee Stuermer: i'm just to stick with the tax part of it definitely as Scott was saying just.
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Aimee Stuermer: plan early we tend to plan really early it, for example, even with the supply chain issues that are going on with David and such.
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Aimee Stuermer: We ordered our icons for this year, back in April and they still haven't arrived, but they will be, I suppose, by mid next month, so.
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Aimee Stuermer: You have to plan early, you have to plan early so that that equipment is in use by the end of the year, if you are going to use that and exactly like Derek was saying, you have to decide if it's the right fit for you.
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Aimee Stuermer: I would not have purchased my rapid pack if I didn't know that I needed it.
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Aimee Stuermer: don't just do it for the tax purposes, you know such make sure that you're using something you can actually implement and and will make a difference, for your business excellent.
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Todd Eury: And Scott and coming to you to to wrap up the the presentation today, do you have any advice for pharmacy owners listening in right now as we're closing in the end of 2021.
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Scott Sykes: I guess a good good piece of advice is to get those books in order and start your tax plan and now because.
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Scott Sykes: There there's definitely some strategies to look at because, once you pass the end of the year, those strategies for the previous year are cut in half so.
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Scott Sykes: you're going to be very limited if you if you wait till after the end of the year so go ahead and get going now and get this stuff in place.
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Todd Eury: This has been exceptional, I want to say thank you so much to our say for being such a consistent provider of great information that goes far beyond just the equipment that they.
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Todd Eury: service and sell and help you to strategize they're really concerned with their customers success it makes absolute sense that they would be.
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Todd Eury: I want to give a special thank you to Scott sykes and your family, they have been champions of Community pharmacy for years and just constantly bring.
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Todd Eury: such great information to pharmacist at conferences webinars and, of course, through this presentation, so thank you so much Scott for being here.
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Scott Sykes: Thank you, thank you for having me it's been great.
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Todd Eury: Eric Thank you so much for not only joining the pharmacy podcast network, but for being part of our webinar today.
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Derek Delaney: Oh, I am very glad to be here, thank you for letting me be involved in this conversation.
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Todd Eury: And amy the star of the show Thank you so much for what you do we're absolutely indebted to our pharmacists throughout the nation and how intricate and important, you are to your community as a pharmacy owner Thank you so much for being here.
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Aimee Stuermer: Thank you, thank you so much.
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Todd Eury: And then, our our participants Thank you so much for spending your time, we know how busy you are we know how stressful it is to run a Community pharmacy business just from.
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Todd Eury: The stories that we hear over and over again if there's absolutely anything that Ark safe can do for you advisement advice.
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Todd Eury: Helping you to implement the right technology at the right time, please reach out to our safe, you can go to.
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Todd Eury: dot com and go into our show notes will have connections to several members of the team that you can reach out to.
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Todd Eury: And thank you so much for being part of the pharmacy podcast nation Thank you so much for allowing me to be part of this panel and in being here with you today, and with that we're wrapping up and we'll talk to you next time.
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Scott Sykes: Thank you.
Description:
The Section 179 tax deduction has helped small businesses offset the cost of capital equipment for years. The dysfunction in Congress has frequently caused the statutory purchase limit to seesaw until just before year-end. But, the good news is the IRS Section 179 purchase price limit of $500,000 was made permanent law in 2016 with the passage of the PATH act.
In 2017 the deduction limit for Section 179 increased to $1 million for 2018 and beyond. The limit on equipment purchases increased to $2.5 million.
Furthermore, the bonus depreciation is: 100%
After calculating your potential Section 179 savings below, call us today at (877) 978-2364 or fill out the form to the right. We’d love to learn more about your pharmacy and let you know the many ways the RapidPakRx can increase your profitability.
Special Guests:
Pharmacy Owner: Aimee Stuermer PharmD
Pharmacy CPA & Accounting Expert: Scotty Sykes w/ Sykes & Company
Pharmacist Financial Planner: Derek Delaney w/ PharmD Financial Planning
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