How to Leverage Section 179 & Save on Taxes

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.

104

00:19:06,840 --> 00:19:16,800

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.

105

00:19:17,490 --> 00:19:33,510

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.

106

00:19:34,620 --> 00:19:42,660

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.

107

00:19:43,140 --> 00:19:51,690

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.

108

00:19:52,200 --> 00:20:06,510

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.

109

00:20:07,650 --> 00:20:19,950

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.

110

00:20:20,460 --> 00:20:27,750

Derek Delaney: It may make sense not to defer that income into something like a traditional IRA and not pay tax on it now.

111

00:20:28,470 --> 00:20:37,980

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.

112

00:20:38,760 --> 00:20:50,580

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.

113

00:20:52,170 --> 00:20:57,060

Todd Eury: Derek thanks for that you know, I was thinking as you were saying that back to.

114

00:20:58,050 --> 00:21:17,190

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.

115

00:21:18,630 --> 00:21:31,410

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.

116

00:21:31,440 --> 00:21:34,170

Todd Eury: we've got his bed it's all like blurring because.

117

00:21:34,170 --> 00:21:35,250

Aimee Stuermer: It is such a blur.

118

00:21:36,450 --> 00:21:41,010

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.

119

00:21:41,970 --> 00:21:57,480

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.

120

00:21:58,710 --> 00:22:16,440

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.

121

00:22:17,940 --> 00:22:34,020

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.

122

00:22:35,100 --> 00:22:41,820

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.

123

00:22:42,450 --> 00:22:49,590

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.

124

00:22:50,580 --> 00:22:59,910

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.

125

00:23:00,720 --> 00:23:10,590

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.

126

00:23:11,520 --> 00:23:24,480

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.

127

00:23:26,160 --> 00:23:31,620

Todd Eury: So I purchased a rapid Pack on December 30 I better get it.

128

00:23:31,770 --> 00:23:34,500

Todd Eury: pumping out a prescription first right.

129

00:23:34,530 --> 00:23:35,670

Scott Sykes: yeah exactly.

130

00:23:36,360 --> 00:23:38,970

Todd Eury: Very good, well don't wait if you're listening to this.

131

00:23:39,000 --> 00:23:41,430

Scott Sykes: yeah, this is not the time to get going yeah.

132

00:23:41,790 --> 00:23:48,240

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.

133

00:23:48,690 --> 00:24:02,940

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.

134

00:24:04,560 --> 00:24:07,590

Todd Eury: That the tax experience that I had in.

135

00:24:11,580 --> 00:24:18,210

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.

136

00:24:18,930 --> 00:24:29,970

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.

137

00:24:30,630 --> 00:24:44,520

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.

138

00:24:46,320 --> 00:25:03,120

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.

139

00:25:04,620 --> 00:25:12,510

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.

140

00:25:12,810 --> 00:25:24,270

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.

141

00:25:25,320 --> 00:25:34,950

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.

142

00:25:35,370 --> 00:25:49,530

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.

143

00:25:52,320 --> 00:26:01,740

Todd Eury: So My other question that i'm thinking about is the world of employees and how I may need to take.

144

00:26:03,000 --> 00:26:14,820

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.

145

00:26:16,110 --> 00:26:34,350

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.

146

00:26:36,450 --> 00:26:50,790

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.

147

00:26:52,110 --> 00:26:57,390

Scott Sykes: there's there's there's a few of them out there, like hiring a veteran or something like that, but.

148

00:26:58,740 --> 00:27:02,910

Scott Sykes: completely separate and distinct there as far as depreciation and hiring.

149

00:27:05,130 --> 00:27:20,190

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.

150

00:27:21,210 --> 00:27:22,320

Todd Eury: For your own pharmacy.

151

00:27:23,460 --> 00:27:39,750

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.

152

00:27:41,850 --> 00:27:51,180

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.

153

00:27:51,480 --> 00:28:04,740

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.

154

00:28:05,100 --> 00:28:06,420

On the section 179.

155

00:28:07,890 --> 00:28:18,240

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.

156

00:28:19,710 --> 00:28:23,490

Scott Sykes: BONUS appreciation of limits as far as that's concerned so.

157

00:28:24,840 --> 00:28:30,630

Scott Sykes: For the for most nine out of 10 pharmacies not going to be a problem, any limits whatsoever.

158

00:28:34,140 --> 00:28:43,020

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.

159

00:28:43,890 --> 00:28:58,560

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.

160

00:28:59,100 --> 00:29:11,670

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.

161

00:29:12,240 --> 00:29:21,660

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.

162

00:29:22,110 --> 00:29:42,780

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.

163

00:29:44,130 --> 00:29:58,290

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.

164

00:29:59,700 --> 00:30:06,150

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.

165

00:30:06,930 --> 00:30:12,210

Scott Sykes: Certainly, you want to get in line now sooner rather than later if you're looking to.

166

00:30:12,750 --> 00:30:25,200

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.

167

00:30:25,830 --> 00:30:35,370

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.

168

00:30:36,060 --> 00:30:44,880

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.

169

00:30:46,050 --> 00:31:01,170

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.

170

00:31:02,070 --> 00:31:10,680

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.

171

00:31:10,980 --> 00:31:26,070

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.

172

00:31:27,000 --> 00:31:31,350

Scott Sykes: that's a 1031 exchange real estate is really the big.

173

00:31:32,640 --> 00:31:34,290

Scott Sykes: area involved in that.

174

00:31:35,730 --> 00:31:46,560

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.

175

00:31:47,430 --> 00:31:54,840

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.

176

00:31:55,290 --> 00:32:08,460

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.

177

00:32:11,130 --> 00:32:13,170

Todd Eury: Thank you, Derek that's a really good point.

178

00:32:13,410 --> 00:32:29,550

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.

179

00:32:31,380 --> 00:32:36,120

Todd Eury: You know the right off of the depreciation also hits the income that's remaining.

180

00:32:38,460 --> 00:32:52,170

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.

181

00:32:53,400 --> 00:32:56,520

Scott Sykes: BONUS depreciation options out there yep.

182

00:32:56,580 --> 00:33:15,750

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.

183

00:33:18,360 --> 00:33:24,150

Scott Sykes: Well, the $10,000 in that example would be a write off decreasing your taxable income your.

184

00:33:25,500 --> 00:33:27,210

Scott Sykes: I hope that answers that question.

185

00:33:28,860 --> 00:33:39,570

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.

186

00:33:40,080 --> 00:33:50,430

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.

187

00:33:51,270 --> 00:34:00,870

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.

188

00:34:01,500 --> 00:34:10,320

Todd Eury: Reimbursement models not attached to medicaid not attached to some private insurance, maybe something that's cash based, for example, we hear.

189

00:34:10,650 --> 00:34:19,620

Todd Eury: A lot of pharmacies starting to think of the supplement world as well as the veterinarian opportunity for pets and pet meds.

190

00:34:20,370 --> 00:34:34,680

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.

191

00:34:35,700 --> 00:34:46,530

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.

192

00:34:47,100 --> 00:35:01,350

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.

193

00:35:02,550 --> 00:35:13,800

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.

194

00:35:15,090 --> 00:35:25,650

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.

195

00:35:26,220 --> 00:35:36,690

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.

196

00:35:37,290 --> 00:35:50,250

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.

197

00:35:50,850 --> 00:36:04,260

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.

198

00:36:06,540 --> 00:36:18,510

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.

199

00:36:22,560 --> 00:36:37,050

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.

200

00:36:37,680 --> 00:36:45,990

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.

201

00:36:46,020 --> 00:36:48,930

Scott Sykes: Yes, that's a great point Derek, thank you for bringing that up.

202

00:36:50,040 --> 00:36:56,520

Scott Sykes: The to take these aggressive depreciation, you have to use at least 50% of it for business, use and.

203

00:36:57,810 --> 00:37:05,760

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.

204

00:37:07,020 --> 00:37:11,580

Todd Eury: amy are you and your team using delivery vehicles, right now, of your own.

205

00:37:12,720 --> 00:37:17,940

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.

206

00:37:19,740 --> 00:37:34,920

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.

207

00:37:35,940 --> 00:37:46,530

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.

208

00:37:47,880 --> 00:37:54,030

Todd Eury: And then, obviously, if I have a new Center that i'm setting up a section in my pharmacy.

209

00:37:54,360 --> 00:38:10,230

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.

210

00:38:10,530 --> 00:38:12,840

Scott Sykes: Yes, Sir yep very good.

211

00:38:13,350 --> 00:38:24,630

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.

212

00:38:24,870 --> 00:38:35,280

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.

213

00:38:35,580 --> 00:38:42,150

Scott Sykes: Create losses and some instances where bonus, and you need to understand the state differences there with your advisors.

214

00:38:42,840 --> 00:38:55,590

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.

215

00:38:56,670 --> 00:39:03,990

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.

216

00:39:04,260 --> 00:39:12,930

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.

217

00:39:13,800 --> 00:39:18,990

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.

218

00:39:19,380 --> 00:39:25,620

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.

219

00:39:27,000 --> 00:39:33,420

Derek Delaney: Get that deduction in all actuality I have found plenty of times we're not doing that.

220

00:39:34,020 --> 00:39:47,280

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.

221

00:39:49,170 --> 00:40:03,300

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.

222

00:40:04,590 --> 00:40:13,260

Todd Eury: What individual would reach out to farm D financial planning in utilizing the services that you provide.

223

00:40:14,250 --> 00:40:27,720

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.

224

00:40:28,770 --> 00:40:37,470

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.

225

00:40:38,250 --> 00:40:47,010

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.

226

00:40:48,960 --> 00:41:02,760

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.

227

00:41:04,080 --> 00:41:08,850

Aimee Stuermer: i'm just to stick with the tax part of it definitely as Scott was saying just.

228

00:41:09,510 --> 00:41:16,740

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.

229

00:41:17,040 --> 00:41:23,760

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.

230

00:41:24,180 --> 00:41:34,260

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.

231

00:41:34,560 --> 00:41:38,040

Aimee Stuermer: I would not have purchased my rapid pack if I didn't know that I needed it.

232

00:41:39,120 --> 00:41:49,080

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.

233

00:41:49,920 --> 00:42:04,350

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.

234

00:42:06,000 --> 00:42:13,290

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.

235

00:42:14,250 --> 00:42:24,660

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.

236

00:42:25,200 --> 00:42:31,560

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.

237

00:42:33,240 --> 00:42:44,820

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.

238

00:42:45,360 --> 00:42:54,030

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.

239

00:42:54,360 --> 00:43:04,920

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.

240

00:43:05,250 --> 00:43:14,220

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.

241

00:43:14,250 --> 00:43:16,230

Scott Sykes: Thank you, thank you for having me it's been great.

242

00:43:16,920 --> 00:43:22,920

Todd Eury: Eric Thank you so much for not only joining the pharmacy podcast network, but for being part of our webinar today.

243

00:43:23,430 --> 00:43:27,510

Derek Delaney: Oh, I am very glad to be here, thank you for letting me be involved in this conversation.

244

00:43:28,800 --> 00:43:42,660

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.

245

00:43:43,140 --> 00:43:44,520

Aimee Stuermer: Thank you, thank you so much.

246

00:43:45,240 --> 00:43:56,670

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.

247

00:43:57,060 --> 00:44:04,500

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.

248

00:44:05,220 --> 00:44:11,220

Todd Eury: Helping you to implement the right technology at the right time, please reach out to our safe, you can go to.

249

00:44:11,940 --> 00:44:19,140

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.

250

00:44:19,500 --> 00:44:33,270

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.

251

00:44:34,500 --> 00:44:34,980

Scott Sykes: Thank you.