Tax-Exempt Purchase of Physician Practices: Assets or Stock?

When tax-exempt hospitals and healthcare systems are purchasing physician practices, they need to be aware that whether the acquisition is structured as an asset purchase or a stock purchase can make a big difference in the transaction’s cost. If a tax-exempt organization intends to operate the medical practice as a tax-exempt activity, it should try to negotiate a direct purchase of the assets. Shareholder physicians, however, will want to structure the transaction as a stock sale.