Selling a Nevada medical practice to private equity: the tax picture

How Nevada taxes the sale

Nevada does not tax the gain on your practice sale, and the protection is constitutional rather than statutory. Article 10, Section 1(9) of the Nevada Constitution states that no income tax shall be levied upon the wages or personal income of natural persons. There is no separate capital gains tax, because a capital gain is personal income and falls under the same bar. For a seller comparing states, that constitutional footing is worth something on its own, since undoing it requires a constitutional amendment rather than an ordinary bill.

Two entity-level taxes still exist, and neither is an income tax on you. The Commerce Tax applies to a business entity whose Nevada gross revenue exceeds $4 million in a taxable year, and only the excess above $4 million is taxed. Rates are set by industry code: 0.190 percent for health care and social assistance, and 0.181 percent for professional, scientific and technical services. Even at the top of a practice's range these are small numbers, and the sale itself is largely carved out, because NRS 363C.210(1)(q) excludes receipts from the sale, exchange or other disposition of assets described in Sections 1221 and 1231 of the Internal Revenue Code from gross revenue, and NRS 363C.045(3)(d) excludes amounts realized in a list of reorganizations.

The carve-out is broad but not complete, and this is where the allocation matters again. Accounts receivable and inventory are not Section 1221 capital assets, so consideration allocated to them does not obviously fall inside the exclusion. If your deal assigns a meaningful amount to receivables, that piece deserves a look rather than an assumption. The tax pillar page covers why the allocation drives so much else besides.

The Modified Business Tax is Nevada's payroll tax, currently 1.17 percent for a general business on gross wages less employer-paid health care benefits, with the first $50,000 of quarterly taxable wages exempt. It is an ongoing operating cost rather than something a sale triggers. In a transaction it matters mostly as a normal expense in the earnings the buyer is valuing, and as a diligence item, since unpaid amounts raise successor liability questions.

Can I move to Nevada before I sell?

This is the question behind most Nevada searches, and the honest answer is that Nevada is the easy half of the problem. Nevada has no income tax, so it runs no residency test of its own for income tax purposes. There is no Nevada day count to satisfy. What decides the outcome is whether the state you are leaving accepts that you left, and whether your gain is sourced to that state regardless.

Nevada does give you one useful piece of evidence. Under NRS 41.191, a person who has established Nevada domicile may file a sworn declaration with the clerk of the district court for the county where they live, stating that they are a bona fide resident, giving the present place of residence, the state previously inhabited, and any other residences maintained elsewhere. It is worth filing. It is not a safe harbor, and NRS 41.197 expressly preserves other methods of proving domicile, so treat it as one document among many rather than as proof.

The harder half is the departing state, and it deserves its own treatment. If you are leaving California or New York, read changing your state residency before a sale before you do anything, because the rule that matters most is not about residency at all. Gain from an asset sale or a goodwill sale by a business operating in the old state is frequently sourced to that state whether or not you have moved.

Corporate practice of medicine and the MSO structure in Nevada

Nevada recognizes a corporate practice of medicine doctrine, but you will not find it stated in a single section. It is drawn from Nevada attorney general opinions interpreting the Professional Entities Act, including an opinion issued in 2002, read alongside NRS Chapter 89, which requires that the people who organize and own a professional entity hold the applicable professional license. NRS 630.020 defines the practice of medicine broadly.

The practical result matches what you see elsewhere. A licensed professional corporation employs the physicians and owns the clinical side. A management company, which the investor owns, provides the administrative services and takes a management fee, and gets economic control through the management agreement and through succession and buy-sell provisions over the PC shares. Structures of this kind are used in Nevada and are generally treated as workable when the professional corporation keeps genuine clinical authority. The MSO and friendly PC page walks through what that separation is supposed to look like and where it gets thin.

Dentists have a stricter and clearer rule

If you are selling a dental practice in Nevada, one statutory provision deserves attention before the fee structure is agreed. NRS 631.215(2)(h) permits a person who is not a dentist to provide business support services without being deemed to practice dentistry only if that person does not receive payments based on a percentage or share of revenues or profits, and does not exercise any authority or control over the clinical practice of dentistry. NRS 631.215(3) directs the dental board to adopt regulations on impermissible control.

A percentage-of-collections management fee is the default DSO arrangement in most of the country. Nevada's provision cuts against it directly. That does not make a Nevada dental transaction impossible, and buyers who work in the state structure around it, but it does mean a term sheet drafted on the assumption of a standard percentage fee may need rework. Surface it early. The dental and DSO page covers the rest of what is different about these deals.

Does the deal require notice to the state?

Nevada has a healthcare transaction notice law, enacted in 2021 and codified at NRS 598A.360 through 598A.430, and it works differently from California's and New York's. The trigger is not deal size. Under NRS 598A.370, notice is required when a transaction causes a material change to the business or corporate structure of a group practice or health carrier and would result in that entity providing 50 percent or more of any health care service within a geographic market. Material change includes mergers, consolidations, acquisitions of assets or equity interests, and employing substantially all the practitioners of a group practice.

Where it applies, notice goes to the attorney general at least 30 days before the transaction closes under NRS 598A.390. Separately, NRS 598A.400 requires a party making a federal Hart-Scott-Rodino filing that involves the assets of a Nevada group practice to give the attorney general a copy. Civil penalties reach $1,000 per day.

Because the threshold is market share rather than dollars, a single practice joining a platform usually falls outside it, while a platform assembling most of a specialty in Las Vegas or Reno does not. That is our read of how the statute is built rather than a determination about your deal, and the market definition is the part worth arguing about if it is close.

Non-compete rules in Nevada

Nevada has no physician-specific non-compete rule. NRS 613.195 governs every non-compete in the state, and it has been amended only twice since it was added in 2017, most recently in 2021. There is no health care carve-out of the kind Texas adopted.

The general limits still do real work. A covenant is void unless it is supported by valuable consideration, imposes no restraint greater than necessary to protect the employer, does not impose undue hardship on the employee, and is appropriately limited in time, geography and scope. An employer may not restrict a former employee from providing services to a customer who voluntarily chose to follow them. A covenant cannot be applied to an employee paid solely on an hourly wage. If you are let go in a reduction in force, the covenant is enforceable only for as long as the employer continues paying you equivalent compensation. Courts are directed to revise an overbroad covenant rather than strike the agreement, and attorney fees are available for certain violations.

One piece of history is worth knowing because it shapes expectations. A 2023 bill that would have prevented hospitals from restricting where a health care provider may practice cleared both chambers of the legislature and was vetoed. So the policy question has been live in Nevada without producing a physician-specific statute.

Estate tax

Nevada imposes neither an estate tax nor an inheritance tax, and again the protection is constitutional. Article 10, Section 1(7) provides that no inheritance tax shall ever be levied. Article 10, Section 4 permits an estate tax only to the extent of a credit allowed under federal law, and because the federal state death tax credit was replaced by a deduction two decades ago, there is nothing for Nevada to collect. The federal estate tax applies wherever you live, and moving does not change it.

For a physician holding rollover units that are currently cheap and may appreciate, the estate planning opportunity is about the units rather than the state, and the gifting rollover equity page covers it.

Nevada trusts, and one thing to be careful about

Nevada's trust statutes are among the more favorable in the country, which is a genuine reason people put trusts there rather than a marketing claim. A trust interest can last up to 365 years under NRS 111.1031. Self-settled spendthrift trusts are authorized under NRS Chapter 166, and NRS 166.170 sets a short window for creditors, two years from the transfer, or six months after discovery if that is later, with the creditor required to prove a fraudulent transfer by clear and convincing evidence. Because Nevada has no income tax at all, a Nevada trust pays no state income tax on its income.

The thing to be careful about is the incomplete gift non-grantor trust, often sold as a NING, which does not do what a California resident is usually told it does. California enacted SB 131 in 2023, adding Revenue and Taxation Code Section 17082 retroactive to January 1, 2023. It treats an incomplete gift non-grantor trust as a grantor trust for California income tax purposes while the grantor is a California resident, which means the trust's income is taxed on the grantor's California return. A narrow exception exists for a trust that files a California fiduciary return, elects to be treated as a resident non-grantor trust, and distributes or is deemed to distribute at least 90 percent of its distributable net income to charity.

So a Nevada trust is not a way for a California physician to sidestep California tax on a practice sale. Nevada's trust advantages are real, and they become available after a genuine change of domicile, not instead of one.

How much private equity is actually here

Nevada publishes less than the larger states, so the picture is thinner. In testimony presented to the Nevada Legislature's interim health committee in March 2024, private equity was reported to hold between 10 and 30 percent of physician practices across ten specialties in the Reno and Las Vegas metropolitan areas as of 2021, with gastroenterology, dermatology, urology, ophthalmology and primary care among them. The same testimony reported that private equity and publicly traded companies together controlled 40 to 50 percent of the Nevada market in anesthesia and emergency medicine as of 2019.

That testimony came from an advocacy organization rather than a neutral state source, so it is directional rather than definitive. Current Nevada deal counts and Nevada-specific multiples are not published in any form we can verify, which is itself worth knowing when a buyer quotes you a market rate. The specialty pages carry the national figures that are verifiable.

When the state issue is not the issue

If you already live in Nevada, the state tax question is settled and you should spend your attention elsewhere. The purchase price allocation, the rollover terms and the waterfall, and the employment agreement will decide far more about your outcome than anything in this page. A Nevada resident selling a practice has the same 20 versus 37 percent federal problem as everyone else, and the same reasons to care about what the contract calls each dollar.

If you live in California or New York and Nevada is the destination, the move is worth considering and it is not a cure. Read changing your state residency first, because for an asset sale or a goodwill sale the departing state often keeps its claim on the gain no matter where you live when it closes.

What to do next

Model the deal with your own numbers in the after-tax proceeds calculator, and set the state rate to zero to see what the move is actually worth against the federal bill, which usually turns out to be the larger number. Compare the four other states on the states page. Then work through the tax strategies list, which is ordered by deadline rather than by size, because in Nevada as everywhere else the items with the earliest deadlines are the ones that get missed.

If you want someone to read the allocation, the rollover terms, and in a dental deal the management fee structure against NRS 631.215, that is a term-sheet review.