It is important to consider prior to sale, however, how damages will be calculated. Usually, such damages are determined by an agreed upon formula in the purchase agreement. You should remember that all amounts paid for noncompete agreements will be treated as ordinary income to the selling doctor. In other words, the selling doctor must pay taxes on the money when it is received as if it were paid for services rendered. On the other hand, the purchasing doctor must capitalize and amortize the amount paid for the noncompete agreement over a fifteen year period, regardless of the actual term of the agreement.
Most doctors lease their office space from a landlord.
Commercial leases invariably include a provision that requires approval by the landlord of the new tenant. If you fail to obtain the landlord's approval prior to the sale of the business, in all likelihood the selling doctor will continue to be obligated to make lease payments. Patient records are an integral part of every practice. However, the purchasing doctor has no right to review those records without the patients' permission. When a practice is transferred, the purchasing doctor typically agrees to become a custodian of the records.