We recently received a call on the Bukers Hotline from an analyst who was spreading a Schedule C for a sole proprietorship. The analyst noticed an item of Other Expense listed in Part V titled “Section 465(d) carryover.” Their question to us was: What is this item of expense and how does it affect cash flow? …
We have heard this question and/or argument since we started teaching Taxanalysis almost 40 years ago. Some people want to keep their tax return analysis “simple” because it makes them more “efficient,” even though AGI and AGI-based approaches lead to amazingly wrong cash flows. That has never been more true than in today’s tax environment….
Are They Capital Contributions or Charitable Contributions? Have you ever looked at the Schedule K-1 from an S corporation and found values reported on Line 12 Other Deductions with corresponding letter codes, but no description of the actual deduction? An analyst recently called into the Bukers Hotline with a K-1 showing: This analyst is sharp…
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…
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…
Schedule E, page 2, column (k) shows nonpassive income of $135,460. The Form 1065 Schedule K-1 shows two types of distributions on line 19. One distribution is shown in the amount of $75,000 with the letter “A” in front of it. The second distribution is in the amount of $20,000 and has the letter “C”…