I thought the hard part was building it. Turns out, leaving it wrong was even more expensive.

If a dentist friend called me tomorrow and said he was thinking about selling his practice in the next two years, I know exactly what I’d tell him first.

Get a CPA who specializes in practice sales and understands holding companies and other tax entities. Not your regular accountant. Someone who has walked other practice owners through this exact process, before the deal is signed! Because once it’s signed, it’s too late.

I learned that the hard way.

Thirty-seven years of building

I started with one rented treatment room. No patients. No reputation. Just a dental degree and a determination to build something. By the time I sold, I had a seven-operatory practice in a building I owned, and a career I was genuinely proud of.

When a DSO made an offer, it felt like validation. Everything I’d built had real value. The number on the paper was significant. It should have been a moment of pure celebration.

And it was… until tax season.

The structure that cost me

My practice was structured as an S-Corporation, with the practice held in my name rather than a separate holding company. I took a wage as an employee of my own practice and an additional draw on top of that. When the DSO purchased my practice as an asset sale, all of those proceeds were treated as income in a single tax year.

I had been careful. I had withheld a significant amount, well into six figures throughout the year in anticipation of a large tax bill. I thought I had planned ahead.

I still owed tens of thousands more when tax time came.

Even that I could absorb. What I didn’t see coming was what happened next.

The Medicare surprise nobody warned me about

Here’s something most retiring practice owners don’t know about until it’s too late: Medicare uses your income from two years prior to calculate your monthly premium. The official term is IRMAA or Income-Related Monthly Adjustment Amount. In plain language, it means that if your income spikes dramatically in one year, your Medicare premiums spike dramatically two years later.

Mine jumped to nearly $800 per month.

The year after that, still above $700.

I had never heard of IRMAA before it showed up on my bill. Not from my accountant. Not from my financial advisor. Not from the DSO broker. Nobody mentioned it. And by the time I found out, there was nothing to be done.

What I would have done differently

If I could go back, I would have structured the practice inside a holding company years before any sale was on the horizon. A properly structured entity can give you far more flexibility in how sale proceeds are recognized, spread, and taxed. It doesn’t eliminate your tax obligation, but it can give you options that a simple S-Corp in your own name simply doesn’t have.

I would have found a CPA who had done this many times before, not just a general accountant, but someone whose specialty is helping practice owners exit. I would have had that conversation at least two to three years before I sold, not two weeks before signing.

And I would have asked specifically about IRMAA, Medicare premiums, and what a large income spike in a single year does to your costs for the following two years.

What this means for you

If you are within five years of selling a practice, the time to think about this is now. Don’t wait until you have an offer in hand. The structure you are in today will determine how much of your sale you actually keep.

I’m not a CPA or a tax attorney, and nothing here is financial advice. What I am is someone who built a practice for 37 years, sold it, and learned some expensive lessons that I wish someone had shared with me earlier. That’s what this blog is for.

“The DSO isn’t going to protect your tax position. Your broker isn’t going to protect it. You need someone in your corner whose only job is making sure you keep as much of what you built as possible.”

If you’re navigating a practice sale or approaching retirement and want to talk through what I learned, I’m happy to have that conversation. One on one is kind of my thing.

Want to talk through your situation?

I’m not a financial advisor but I’ve been through this and I’m happy to share what I learned. Sometimes a real conversation is worth more than an article.Start a conversation →

One thing to do this week

If you are within five years of selling a practice, call your accountant and ask one question: “Have you personally worked through multiple practice sales involving holding companies and entity restructuring?” If the answer is no or hesitant, find someone who has.

Disclosure: This post reflects my personal experience and is not intended as financial, tax, or legal advice. Please consult a qualified CPA or tax attorney before making decisions about your practice sale or retirement planning