Have you ever encountered an unusually large dollar amount on an individual’s tax return that made you stop and think twice? Recently, an analyst had this situation occur and called in to the Buker’s Hotline for assistance. On this month’s cash flow article, let’s explore their scenario and the appropriate cash-flow adjustments required. Unusual Tax-Exempt…
We recently received a call on the Bukers Hotline from an analyst who was spreading a business return of a partnership entity that was owned by a married couple. The analyst was reviewing the Schedule K-1s issued from the partnership to the two individuals and noticed that the recipient was listed as “Jane Doe Trust”…
What Does This Mean and How Does This Impact Cash Flow? An analyst recently called the Bukers Hotline and asked, “I have a partnership K-1 paying sizeable distributions to the partner listed as David Smith Revocable Living Trust. How do I cash flow this with respect to my borrower, David Smith?” Let’s start first by…
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…
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…
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…
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…
We frequently receive questions on the Bukers Hotline about spreading and properly analyzing K-1s received by individual borrowers, including this most recent question about an “Other Increase” that deserves to be highlighted. A recent caller was analyzing a borrower’s K-1 from an S-corporation and the caller found a shareholder’s basis worksheet attached to the K-1….
We’ve recently received a great question via the Bukers Taxanalysis hotline that deserves some explanation. The caller asked us to explain what is being presented in Sections M and N on the Schedule K-1 of Form 1065, and specifically if they affect the cash flow of the borrower. Section M Section M states whether or…
Many of our users have called the hotline asking if Box 14 (self-employment earnings) on the partnership Schedule K-1 should be included as cash flow to an individual. Since we receive this question often, we felt it was worth explaining in greater detail in our newsletter. At first glance, Box 14 (self-employment earnings) may seem…