If you own a profitable chiropractic practice and own or plan to buy the clinic premises, commission a review of the practice and property together. The engagement should answer what the next decision does to household taxes, staff-benefit costs and clinic cash flow, not simply recommend a list of deductions.
Is this the right engagement for your practice?
This scope is useful before a clinic purchase, major equipment commitment, associate hire, retirement-plan change or owner transition. It is also useful when the practice and building have different preparers and nobody has reconciled the combined result. Routine bookkeeping, payroll execution and filing services should be specified separately if needed.
Ask for concrete outputs before signing
- Practice/property fact map: request a written summary of ownership, rent, loans, participation and existing depreciation, with missing records identified.
- Owner projection: request a coordinated analysis of compensation, health SSTB/QBI restrictions, usable property deductions and household income assumptions.
- Staff-benefit comparison: define whether the work includes comparing plan options and employee costs or only coordinating with a separate plan administrator and actuary.
- Decision and filing checklist: require responsibilities, timing, fees and any work excluded from the engagement, including legal restructuring, valuation or a cost-segregation study.
These are proposed scope items, not an assurance that AE provides every listed specialist service. Confirm the specific deliverables and any outside-provider responsibilities in the signed agreement.
For the technical background, read the industry tax-strategy guide. This page focuses on selecting and scoping an owner-and-property advisory engagement.
Decisions the practice-and-property review should cover
| Decision | What to establish first |
|---|---|
| Buy the clinic premises | Ownership, financing, land/building allocation, lease obligations and expected holding period. |
| Commission cost segregation | Supported depreciable basis, eligible components and whether the owner can currently use resulting losses. |
| Set shareholder wages | Clinical, management and administrative services; employee contributions and revenue sources. |
| Add a cash-balance plan | Owner and employee census, related businesses, actuarial cost and recurring funding capacity. |
Resolve whether clinic losses are currently usable
Rent paid by the practice and received by a separate property entity must be reflected consistently, with support for the lease and business purpose. If the owner materially participates in the tenant business, the self-rental rule generally treats net rental income as nonpassive. A rental loss is not automatically reclassified the same way.
A cost-segregation study may accelerate depreciation while leaving the loss suspended. Determine basis, at-risk amounts, participation, passive-loss treatment and excess-business-loss limits before claiming an offset against practice earnings. Grouping is a separate rules-based decision, not a checkbox available solely because the same person owns both entities. See IRS Publication 925.
Include health SSTB and related rent in the projection
Patient-care services generally fall within the health specified service trade or business category. Eligible owners below the applicable taxable-income threshold may still claim QBI; phase-in rules restrict the deduction as income increases. Above the applicable range, health SSTB income does not qualify. Taxable income and filing status matter, not just the practice's gross receipts.
Putting the clinic building in another LLC does not automatically avoid the SSTB rules. Property or services provided to a commonly owned SSTB can be treated as part of that SSTB under the related-business rule when the 50% common-ownership test is met. Review unrelated tenant space separately. Selling products alongside patient care also requires a factual analysis rather than assuming a separate non-SSTB business.
Sources: IRS Form 8995-A instructions and Treasury Regulation 1.199A-5. Use the threshold and phase-in range for the actual return year; a prior-year instruction's dollar amounts should not be carried forward.
Support compensation with the owner’s actual work
An S corporation must pay reasonable compensation for shareholder services before nonwage distributions. Document patient-care time, management duties, local compensation evidence and the contribution of staff and capital. A profitable practice does not support an arbitrary low salary merely because it also owns equipment.
Compare entity options after payroll costs, state taxes, benefit-plan effects and QBI. Payroll savings cannot be calculated by multiplying all distributions by 15.3%, because Social Security has a wage base and Medicare and other earnings affect the result. Professional-entity and licensing requirements must also be checked. See IRS S-corporation compensation guidance.
Review equipment and improvements before committing cash
Treatment tables, imaging equipment and clinic improvements need asset-specific review. Qualifying assets acquired and placed in service after January 19, 2025 generally receive 100% federal bonus depreciation, subject to acquisition rules and elections. The building and land do not become bonus-eligible simply because the practice uses them. Qualified interior improvements must satisfy the QIP definition; section 179 has separate limits.
Keep invoices, acquisition contracts and evidence that assets were ready and available for use. Compare the deduction with cash flow, state conformity, future depreciation and eventual sale consequences. See IRS Publication 946.
Define the staff retirement-plan work separately
Include associates, reception staff and other employees in the eligibility review. A solo 401(k) cannot simply omit eligible employees. Related-business rules can matter if a spouse or the owner operates another entity. Cash-balance funding requires an actuary and a plan for employee costs, investment assumptions and ongoing contributions; age alone does not establish a deductible amount.
For 2026, the general defined-contribution annual-additions ceiling is $72,000 before eligible catch-ups and the employee deferral limit is $24,500. Neither is guaranteed: wages or self-employment earnings, plan terms and other contributions control. S-corporation distributions are not retirement-plan compensation. Review IRS 2026 retirement limits, IRS one-participant plan rules and IRS Publication 560.
Records needed to scope the review
- Practice and property returns, K-1s and current financial statements.
- Payroll, owner duties and complete employee census.
- Clinic closing records, rent agreement and debt statements.
- Fixed-asset schedules, equipment contracts and suspended-loss schedules.
- Household income projection, retirement documents and expansion or sale plans.
Frequently asked questions
What should the signed advisory engagement include?
Specify the entities and decisions covered, written deliverables, assumptions, responsible parties, fees and deadlines. Identify separately any filing, legal, valuation, cost-segregation or retirement-plan administration work rather than assuming it is included.
Can a chiropractor claim the QBI deduction?
Possibly. Patient-care income generally falls within the health SSTB rules. Eligibility depends on taxable income, filing status and the applicable phase-in rules, not simply practice revenue.
Does a separate clinic LLC avoid the health SSTB restriction?
Not automatically. The property supplied to a health SSTB can be subject to the related-business rule when the 50% common-ownership test is met.
Can clinic depreciation offset my practice profit?
Not automatically. Self-rental net income and net loss are treated differently. Basis, at-risk, passive-activity and other loss limits must be checked before claiming a current offset.
Discuss your review scope with AE Tax Advisors
Contact AE Tax Advisors to discuss the entities, property and decisions you want reviewed. Ask for a written engagement identifying deliverables, responsible parties, fees and deadlines before signing. A consultation does not by itself include a cost-segregation study, valuation, plan administration, amended return or legal work.
General federal tax information, researched November 6, 2026. State rules and individual facts can change the result. This guide is not a determination of eligibility or a promise of tax savings.