QBD

[x999man]

There is a gray area regarding the QBD for some physicians. Those with a medical degree, who specialize in the ancillary fields of medicine for example. More specifically, a Teleradiologist.

1. Although having a medical degree, a teleradiologist does not maintain any physicians office or any facility.

2. .The business is the transmission of data from one location to another, a technology, not a physician's office nor practice.

3. The business is a technology allowing services without seeing any patient.

4. The  business utilizes standard network technologies such as the internet, telephone lines, wide area network, local area network (LAN) and the latest high tech being computer clouds. 

5. Specialized software is used to transmit the images. 

6.Technologies such as advanced graphics processing, voice recognition, artificial intelligence and image compression are often used in this business. 

7. Through teleradiology and mobile DICOM viewers, images can be sent to other locations around the world.

8. This particular teleradiologists LLC, is self owned and a passive flow through entity. There is no medical/physicians office, no medical practice, see no patients, treat no patients, have no hospital admitting rights, never see or interview or examine a patient, and write no prescriptions for any patient. 

9. There is no billing of any patient by this company, nor billing of any insurance carrier at all. Payment is received as a 1099 fee for service.

10. And  no medical records are maintained, no electronic records, no medical files. The business is not inspected by JCAHO, FDA or the MSQA, as other offices are and is not under the state healthcare mandates. 

Any thoughts?

[Bsch4477]

Is this individual basically providing a PACS system as opposed to interpreting images?

PACS (picture archiving and communication system) is a medical imaging technology used primarily in healthcare organizations to securely store and digitally transmit electronic images and clinically-relevant reports

[x999man]

Not maintaining a PACS system. Involves peer review of cases, and reading xrays. Very gray area. One similar teleradiologist was audited and passed, due to the gray areas. A teleradiologist is somewhat a unique type of physician. The big difference with other physicians is no office, no JCAHO inspection's,, not subject to medical practice state mandates and inspections, no direct billing, etc. It looks like this is at the whim of any particular auditor. The IRS eliminated the "direct contact with a patient" clause, but still did not clear this up entirely.  Also as per the IRS Code 62 defination of HealthCare, none of the definition parameters apply in this situation.  

[Bsch4477]

So this person is a licensed radiologist who interprets images.  Who pays them for their services? And self employed or an employee?

Would not the space in which he does his interpretation be his office?

[x999man]

Teleradiologist is elf employed. Paid as an independent contractor via 1099 from dispatch type companies who receive x-rays from other facilities and transmit them to independent contract teleradiologists. Reads from home. Has a home business office(owns an LLC) but no "medical office" as per definition, in that not subject to state  inspections, JCAHO evaluations, State Health Service, and no patients, and not under the auspices of the Dept of State Health Services. Does not bill patients or insurance. It's just not clear cut in the IRS regulations. 

[Bsch4477]

Seems clear cut to me. (Full disclosure, I’m a radiologist). He is a physician who is practicing medicine. He would be hard pressed to claim that he has no patients as he would soon discover if he had a misdiagnosis leading to a malpractice suit. He may not be subject to inspections (radiologists are typically are not) but he practices under a state license and its stipulations and is held to the standards of the American Board of Radiology assuming that he is board certified. He is practicing medicine in an office, i.e. , a medical office. 

[x999man]

Thank you very much for the answer. But there are complicating factors in this scenario of his. He is not just a salaried physician, he is a teleradioloist who owns his own small home business as an pass through LLC/PLLC. His LLC is paid via 1099's, then his LLC pays him and his employee. It is a pass through entity in the health field.  The LLC is taxed as an S corp.

Many physician practices are structured as pass-through entities, which may enable their owners to qualify for the 20% tax deduction for QBI – depending on income level. The key here is "pass through entity".

Pass-through entities include subchapter S corporations, partnerships and some limited liability companies, but the benefits are severely limited (but not eliminated) for “specified service trades and businesses” (SSTB), including physicians. Owners of qualifying pass-through entities will receive a 20% deduction on “qualified business income” (QBI), effectively reducing their maximum effective tax rate. But this deduction is limited for medical professionals who make over $160,700 for single filers ($163,300 in 2020) or $321,600 for those filing jointly ($326,600 for 2020).  For those with more than $210,700 for individuals and $421,400 for joint filers, the deduction starts to phase out.

Healthcare professionals with incomes above these phase-out thresholds will not be eligible for the 20% pass-through income deduction. In some cases, higher-earning physicians may have seen a net increase in their 2018 taxes resulting from other changes in the income tax law. So he wants me to go with the QBI deduction, as his AGI on the joint return is less than $421,400. There will be phase out limitations of course, but even though he is a physician/radiologist/teleradiologist, his identification as a small business owner of a pass through LLC entity, even though a SSTB, legally allows the QBI deduction. This is his and other physician owned small business pass through LLC's thought process. I am preparing returns, and this seems to be correct. Calls to IRS have yielded both yes and no answers. The IRS help center is a useless entity. I welcome all opinions and comments please.

[Bsch4477 · Accepted solution]

A self employed physician, working as a physician, is still a physician. Note that in the final rules for the pass-through it was specifically stated that physicians who do not come face  to face with patients but are practicing medicine are in the excluded group. On the other hand if a physician owns a surgical outpatient facility, the income from the facility would be eligible for the pass through. But any income from activity as a physician would not. Your radiologist is practicing medicine. I would bet that he has medical malpractice insurance. Why would he have it if he is not practicing medicine?

 You apply the pass through to his income at his peril. 

[x999man]

You are right. TY>