Home mortgage interest and other Schedule A nuggets
Drew Asks: I have a question in regards to adding back home mortgage interest paid to personal cash flow (Schedule A – line 8a of 2019 1040). A few years ago, I attended a class that covered how to...
View ArticleCapital Gains are pass-thru. Count them or not?
Donald Asks I recently reviewed a personal tax return where the individual reported a large capital gain from an asset sale. The individual historically reports capital gains, but not as large and not...
View ArticleWhere do I find shareholder contributions and distributions?
Pam's question: Unlike the 1065 K-1 for partnerships and LLC's, I find that many 1120S K-1's do not include the shareholder's equity which reports contributions and distributions with the shareholder....
View ArticleHobby or a Tax Dodge? What lenders need to know before they make the loan
Your question: How long can a business show a loss? Aren't there some rules about hobby losses? Linda says: You have seen it...a business that really looks like a hobby, or a tax dodge. When is a...
View ArticleMust go faster! So many K-1 numbers, so little time…
Craig's question: Can you provide detailed information to explain every box on the k-1? Linda says: Yes, but you actually do not need to know about every box. Much of what is on either the 1120S K-1 or...
View ArticlePassive vs NonPassive Losses: What is a lender to do?
Desi's question: Can passive &/or non-passive losses on the 1040 tax return be added back to borrower/guarantor cash flow for global analysis? I am having trouble finding a definitive answer to...
View ArticleSelf-employment earnings from 1065 K-1
Your question: Can I use the 'Self-employment earnings (loss)' on Line 14 (A) of the 1065 K-1 as cash flow? The post Self-employment earnings from 1065 K-1 appeared first on Linda Keith CPA.
View ArticleWhat to do with 481a adjustment?
Charlene and Yousaf ask: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 481...
View ArticlePassive vs Non-passive K-1 Income/loss: Confusion reigns!
Brian's question: What does it mean when the k-1 income/loss is listed as 'passive' instead of 'non-passive'? The post Passive vs Non-passive K-1 Income/loss: Confusion reigns! appeared first on Linda...
View ArticleWhy Guaranteed Payments are not Guaranteed
Lenders and underwriters in my training workshops on Cashflow Analysis of Tax Returns often stumble a bit on that word ‘guaranteed’. After all, we all know what that means, right? Well, it is dangerous...
View ArticleCash Flow Analysis of K-1s: Count ordinary business income?
Oscar asks: My borrower is a 50% shareholder for a business filing a 1120S. The K-1 indicates $276,970 in ordinary business income and $176,914 in Distributions. I'm giving him the $176,914...
View ArticleUnderstanding Tax Return Analysis and Nominee Income for Credit Analysts: Can...
Your question: What is 'Nominee' income and how do I treat it? Linda says: Ignore the expense and the associated income. The post Understanding Tax Return Analysis and Nominee Income for Credit...
View ArticleUnderstanding Why Tax Returns and Financial Statements Can Differ...
The post Understanding Why Tax Returns and Financial Statements Can Differ Significantly for the Same Year appeared first on Linda Keith CPA.
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 we should reframe...
View ArticleWhen Capital Gains Rules Camouflage the True Cashflow: 1065 K-1
Mike's question: I have a borrower who derives a large percentage of her cash flow from capital gains. She shows a $404M capital gain from sale of ownership in an entity. On the k-1 the entity shows a...
View ArticleUnderstanding Partnership Interests: CPA Tony Mailhot on Negative Basis and...
My friend, Tony Mailhot, is a CPA who knows more about taxes than anyone else I know. I asked him for his take on a recent question Mike asked me about capital gains. What I liked about Tony's answer...
View ArticlePass-Through from a K-1: Count Qualified Dividends?
Amy Asks If a 1065 K-1 reports qualified dividends paid to an individual partner in the amount of $50,000, and that same amount is shown on the partner’s 1040 tax return, schedule B, is this considered...
View Article8 Lender Lessons Learned (?) from the Credit Crisis
I am not at all sure lessons have been learned...yet. You'll find a good list, though, in the Feb 2009 RMA Journal article by J. Tol Broome Jr, EVP and Specialized Lending Group manager of BB&T in...
View Article2 NEW C's of Credit! Apply these in your business borrower relationships
The six Cs of Credit (or 3 or 5) are taught to every lender when they first start out. Here are some: Character Capacity Capability Cashflow Collateral The post 2 NEW C's of Credit! Apply...
View ArticleIs Schedule B Interest Pass-through or Cash Flow?
Patrick AsksIn your manual, Tax Return Analysis: Fundamentals and 1040, you state that interest from a partnership or S corporation can represent payments on a loan made to the entity and for which the...
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