When can a business book goodwill?
When can a business book goodwill? Mark asks: On the balance sheet of a Media Production Company, total assets are reported at $4,048,395 and consist primarily of goodwill of $3,312,324. When asked,...
View ArticleVehicle used for both personal and corporate use – what would you do?
Tax Return Analysis: Business and Personal Use of Vehicles from Linda Keith on Vimeo. Jim asks: What's the best way to account for personal and corporate use of vehicles for schedule C profiles? Linda...
View ArticleThree reasons not to count on goodwill. What does it really tell you?
Three reasons goodwill can mislead a lender Even if the balance sheet is correct... Did the buyer guess right? So the first problem with goodwill is that we are counting on the acquiring company to...
View ArticleMilitary Leave and Earning Statement – is it Cashflow?
Military Leave and Earning Statement - You can use it! Jim's question: Are you familiar with how to read a Military Leave and Earning Statement (LES)? We're trying to assess a borrower who appears to...
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Depreciation: More than an add-back
Mark’s question: I have a loan prospect who has provided me with three years of Schedule E’s reporting rental income and operating expenses on a 3 unit apartment building. In each of the three years,...
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What to do about inventory write-downs?
Amanda’s question: I am looking at four years of company-prepared financial statements that report an adjustment to inventory each year. The amounts are approximately $60k, $220k, $412k, and $605k from...
View ArticleBankers TOP 10 take-aways from tax return analysis training
I just wrapped up a two-day in person training for Lenders on Tax Return Analysis in E. Lansing, Michigan. Thanks to Greenstone Farm Credit Services for hosting! As my team summarized the evaluations...
View ArticleConfusion on add-backs for NOLs and other non-cash items
Ray’s question: I learned to add back Net Operating Losses listed on 1040, Page One, Line 21 because they are non-cash. I just moved to a new bank and they say not to add it back. Why the difference?...
View ArticleCapEx and DCR: Missing something?
CapEx and DCR: Missing something? David's question: What is the best rule of thumb for Capital Expenditures (CapEx) and how it reduces cash flow? When I use the UCA statement to get the debt service...
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Avoid skewed cashflow from disallowed losses
Avoid skewed cashflow from disallowed losses Jacqueline's question: On the 1040 Schedule E Page One, why on some of the rentals are there two loss figures, Line 21 and Line 22? Sometimes the loss on...
View ArticleHow noncash carryover losses DO impact cashflow
How noncash carryover losses DO impact cashflow Josie's question: In a recent training, you said that Net Operating Loss carryovers are not a cash outflow, but might impact cash spent on taxes. So, are...
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Where are the Missing K-1s?
Where are the missing k-1s? Alisha's question: I have a customer who has multiple K-1’s listed on his tax return. He did not have a single one attached to his return so I asked for all of them. He is...
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When is reported revenue misleading?
When is reported revenue misleading? Fred’s question: In the supporting statement for a Schedule C, I found a line labeled "Nominee Distribution to XYZ Partners, Inc". What is this? Linda says: The...
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Global Analysis or Project Analysis? Which should I use?
Barbara’s question: What’s your opinion on the concept of underwriting with K-1s versus full returns on affiliated entities? At present, we collect a minimum of two years tax returns from all...
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Should declining S Corp ordinary income preclude use of positive rental...
Ben asks: I have a borrower who owns 100% of an S-Corp. The S-Corp is a construction company and it also has a large rental portfolio. Its ordinary income has declined from 2011-2012, but its rental...
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When Financial Statements and Tax Returns don’t match
Krista’s question: What is the best way to tackle it when you receive company prepared financials and tax returns and the reconciliation seems to be universes apart? I rarely get compiled financials....
View ArticleWhen are capital gains recurring cashflow?
Sheilah’s question: Are capital gains ever considered a cash event and are they ever to be included in calculating cash flow available for debt service? Linda Says: Yes and no. Love that answer, don't...
View ArticleCorporate Losses and Cashflow – what’s the impact?
Fred's question: Can losses from a C Corp or an S Corp be disregarded if the retained earnings account has a positive balance? For example, normally a loss from a C Corp is used as a reduction in the...
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C&I vs CRE: Guaranteed Payments
Arthur’s question: Should 1065 K-1 guaranteed payments be subtracted from company cashflow when finding debt service? Most of my career has centered on CRE loan underwriting and origination. The CRE...
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Bankers Online Training – Five free modules
Actually helpful! Have you considered banker's online training but have suffered through 'talking heads' videos or 'recorded webinars' that stay on the same slide for way too long? Well, true enough,...
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