Increase federal taxes when borrower has large NOL?
Lisa asks: If the client has an NOL carryover on their 1040, causing income tax to be $0, would we need to estimate income taxes after adding back the NOL carryover? ...
View ArticleDo I use self-employment earnings from the 1065 K-1?
Bill asks: On the managing member’s 1065 Schedule K-1 for an LLC, Box 14 “Self-employment earnings (loss)" is $9,862,741 with a code letter of “C”. Is this actual cash flow to the managing member or...
View ArticleSchedule C Balance Sheets: Required under Appendix Q?
Paula asks: When doing a mortgage loan under the Appendix Q guidelines, we have been told a Balance Sheet is required, even for a Sole Proprietorship. I thought there was no legal distinction between...
View ArticleDistributions from General Partnership to C-Corporation
Higgins asks: I see a partnership has made distributions to various C-corporations. The C-corporations received Schedule K-1s showing the distributions. Where on form 1120 would I see these...
View ArticleDouble-counting Pass Through Cash Flow
Joey asks: I am concerned about double-counting income on pass through entities. Here is my example: XYZ company started 1/1/17. The company made $100,000.00 in profit. The personal tax return of XYZ...
View ArticleDiscrepancy in taxes paid on C-Corp Tax Return
Ryan asks: On the 1120 tax return, at the bottom of page 1, it lists total tax of $29,280. However when looking at page 5, Schedule M-1, there is no Federal Income Tax listed. Is there a reason why the...
View ArticleMillennial Bankers: Crash Course in the Credit Collapse
Credit and lending professionals in my presentations on Credit Risk Readiness at banking associations, and in my training programs on Global Tax Return Analysis, often include Millennials, some of whom...
View ArticleDouble-Counting Capital Gains Income from a 1065 K-1
Jackie asks: My bank has a lot of financial services clients who participate in investment vehicles (private equity/venture capital funds) that issue a 1065 K-1. In our goal to give them credit for the...
View ArticleThe Tax Cut and Jobs Act: What difference will it make for borrower analysis?
I have not gotten a lot of questions about the Tax Cut and Jobs Act (TCJA) yet, but they will hit as soon as the 2018 tax returns are out. Most of the provisions took effect on January 1, 2018. I went...
View ArticleTCJA: Why borrower tax returns may change before 2018
What is changing this year? You may know that the tax law does not take effect until January 2018, so why would you see changes in the 2017 return? what difference will that make to a loan officer or...
View ArticleDraft 2018 1040 ‘Postcard’: Where is the cash flow?
The Internal Revenue Service has released a draft of the new, simplified, postcard size 1040. And it will replace the 1040, 1040A and 1040-EZ. Here is where lending and credit professionals will find...
View ArticleWhere are Guaranteed Payments on a 1040?
Michael’s question: My question is about 1065, K-1,Part III section 4 Guaranteed Payments. In Lender's Online Training you taught us that guaranteed payments are cashflow, and that...
View ArticleHow digital communications are eroding the C’s of Credit
Changes in the way we communicate with borrowers may be making it harder to apply the C's of Credit to loan origination decisions and ongoing monitoring. Bear with me, I am not going against the tide...
View ArticleBorrower’s mindset: Residential vs Commercial Real Estate
As always, I am on the hunt for information that will give real estate lenders insight into the minds, motivation and method of their investor/borrowers. Whether your bailiwick is residential or...
View ArticleCash Flow Analysis of a Non-Profit Entity
Stephanie’s question: How do you apply the cash flow analysis rules of a business to a non-profit entity instead? Linda's answer: The non-profit entities file a Form 990: Return of Organization Exempt...
View ArticleAre you missing a depreciation add-back?
Jordy’s question: Should Form 4562 depreciation be added back to cash flow? Every analysis I have seen does not use Form 4562 and instead goes to the schedules (on the individual return) and the front...
View ArticleSize Matters: Are banks ready for the next recession?
In the 2018 Credit Risk Readiness Survey, we asked banks whether they were more or less optimistic than last year. Blue= Agree or strongly agree; White=neutral; Aqua = Disagree or strongly disagree....
View ArticleTwo Year-End Webinars for Bankers
Things slow down for some of us in December so this is a perfect time to fit in two webinars that will help you and your customers in 2019. Improve your readiness for the next recession. Understand...
View ArticleChanges to the 2018 tax forms will be confusing
I update the tax forms we use in our resource manuals and www.LendersOnlineTraining.com modules on tax return analysis yearly. It is easy to see how the 2018 forms and tax due will compare because I...
View ArticleWhat to do with 481a adjustment?
Charlene’s and Yousaf’s question: Both Charlene and Yousaf had a question about 481a this month. It must be a good one! Charlene said: Our client, an S corp., has other income on line 10 which includes...
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