Have you ever come across a Schedule K-1 that reports W-2 wages? Does this represent actual cash wages received by the recipient of the K-1? An analyst recently called into the Bukers Hotline with this exact question to determine if and how this affects their personal cash flow analysis. The Quick Answer To answer the…
Are the income and expenses shown on a Schedule C of a single-member LLC real cash flow?
Does a Section 1031 exchange with zero recognized gain create a cash impact to the borrower? Section 1031 exchanges, also referred to as like-kind exchanges, can result in massive tax savings for your borrowers. This is very popular and something you’ll often see for borrowers with real estate investments, but do you know how this…
Is This Real Depreciation? An experienced lender called into the Bukers Hotline this month with a question about Section 179 expense and the Schedule E. Here’s the situation: The lender’s question: Is this real depreciation that should be added back to the individual borrower’s cash flow? Answer: No, the $20,000 shown on Schedule E, page…
The Scenario An analyst who called the Bukers Hotline has a borrower with a Schedule D that shows: However, only ($3,000) of those total losses carries to Form 1040 line 7a due to the capital loss limitation rules. The sum of the capital loss carryovers totaled ($495,000) which nearly doubled her borrower’s $250,000 salary. The analyst…
Have you ever noticed two different versions of the Schedule D included with your borrower’s Form 1040? How can you tell which version of the Schedule D should be used for your cash flow analysis and which one should be ignored? An analyst recently called into the Bukers Hotline with this exact question. It’s imperative…
Have you ever looked at a Schedule K-1 from a partnership and seen significant decreases in the profit, loss, and/or capital percentages? An analyst recently called into the Bukers Hotline to ask whether she needs to make an adjustment to her cash flow analysis for the decrease in her borrower’s ownership percentages. The answer depends…
An experienced banker called into the Bukers Hotline with a great question on wages and the Form W-2. Here was the situation: The banker’s question: Which wage figure do I include in my cash flow analysis? Should I use wages from line 1 of the Form 1040 of $210,000 or the Medicare wages of $228,000…
When analyzing the cash flow of an individual who is either a business owner or has investments in multiple businesses, your immediate priority is to make sure that you have received a copy of every Schedule K-1 that the individual has received. Whether the K-1 is from a partnership or an S corporation, we need…
The Bukers Hotline received a call from a banker analyzing a Schedule D that included a long-term capital gain from excess distributions for about $10 million. Where do excess distributions come from? Is this cash flow for our prospective borrower? The Schedule D is by far one of the most challenging forms to analyze in a cash flow analysis…