Urgent message: How physician and entrepreneur investors structure their urgent care center may expose them to an income tax liability from phantom income, but there are steps they can take to ensure there are sufficient funds to cover it.
Introduction
Income taxes are one of life’s certainties for most working Americans. Typically, however, income taxes are paid only on cash received during the course of a year. For example, a Form W-2 received by an employee summarizes the amount of wages that were paid to that employee during the year, similar to how a Form 1099-INT summarizes the amount of interest income that was paid to an individual during the course of the year (e.g., from a bank account). No one is surprised when their accountant tells them they owe taxes on these amounts.