The Gulf Opportunity Zone Act of 2005: Physician Provisions
The Gulf Opportunity Zone Act (GOZA) that was signed into law by President Bush in December of 2005 provides major tax incentives for business development in the 49 Mississippi counties that were included in the Hurricane Katrina disaster declaration. GOZA contains a number of incentives for businesses, including medical practices, that should be considered by physicians. The Mississippi counties included in the GO Zone are:
Adams, Amite, Attala, Claiborne, Choctaw, Clarke, Copiah, Covington, Forrest, Franklin, George, Greene, Hancock, Harrison, Hinds, Jackson, Jasper, Jefferson, Jefferson Davis, Jones, Kemper, Lamar, Lauderdale, Lawrence, Leake, Lincoln, Lowndes, Madison, Marion, Neshoba, Newton, Noxubee, Oktibbeha, Pearl River, Perry, Pike, Rankin, Scott, Simpson, Smith, Stone, Walthall, Warren, Wayne, Wilkinson, Winston, and Yazoo Counties.
50% Bonus Depreciation: This is applicable to property or equipment that is placed in service in the disaster area after August 28, 2005, but before December 31, 2007. This property or equipment is eligible for a bonus depreciation deduction that could provide a substantial tax benefit in the form of an immediate first-year tax deduction equal to 50% of the adjusted cost of the asset. The ability to front-load an asset's depreciation in its first year of use makes the deduction more valuable in most instances. This particular benefit should be considered by physicians who are planning to install an electronic health record system.
Net Operating Loss Carryback: GOZA provides a special five-year carryback period for disaster zone losses for any tax year ending on or after August 28, 2005. Ordinarily, taxpayers may only carry net operating losses back 2-3 years.
Work Opportunity Tax Credit: A medical practice employing anyone who resided in the disaster area is eligible for an income tax credit equal to 40% of the first $6,000 of wages paid the first year.
Expensing for Certain Demolition Cost and Clean-Up: Taxpayers may deduct 50% of any qualified GO Zone clean-up cost. Qualified GO Zone clean-up costs include any amounts paid or incurred after August 27, 2005, and before December 31, 2008 (that would otherwise be capitalized), for the removal of debris from, or the demolition of structures on, real property that is located in the GO Zone.
The Mississippi State Medical Association has distributed information to their member physicians about the act, but if your physicians are not members of the MSMA, they may need to know more about the provisions applicable to physicians.
Here are some links that may be helpful:
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