Section 461(l) Explained: Excess Business Loss Rules for Lenders and Cash Flow Analysis
Section 461(l) Explained: Excess Business Loss Rules for Lenders and Cash Flow Analysis Introduction Have you ever come across something called a “Section 461(l) excess business loss adjustment” on an individual tax return and wondered what it is? We recently received a call on the Bukers Hotline about this item and whether it should be […]
Tax-Exempt Interest Income from Pass-Through Entities
Tax-Exempt Interest Income from Pass-Through Entitles 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 […]
Capital Gains and Losses: Recurring or Non-recurring?
Capital Gains and Losses: Recurring or Nonrecurring? The other day, an analyst called in to the Bukers Hotline asking about some items that were reported on their individual borrower’s Schedule D. They wanted to know whether their borrower’s capital gain was recurring or non-recurring, and what the associated cash flow adjustments should be. On this […]
Medicaid Waiver Payments on Form W-2: What Lenders Should Know
Medicaid Waiver Payments on Form W-2: What Lenders Should Know An analyst recently called into the Bukers Hotline with a unique situation. A borrower, who hadn’t yet filed their 2024 tax return, submitted their 2024 W-2 for cash flow analysis. When spreading the salary information directly off the W-2, the analyst noticed that the amount […]
Paid Family Leave – How is it Reported on a Tax Return?
Paid Family Leave How is it Reported on a Tax Return? An analyst reached out to us recently on the Bukers Hotline with a question about the Family and Medical Leave Act (FMLA) and how it may affect their borrower’s cash flow. The borrower told the analyst that their W-2 wages were going to appear […]
GILTI as Charged: How to Cash Flow Global Intangible Low-Tax Income
GILTI as Charged How to Cash Flow Global Intangible Low-Tax Income We recently received a call on the Bukers Hotline from an analyst who was spreading a prospective borrower’s individual tax return and noticed some unusual sources of income. The analyst told us that they received Form 8992 and Form 5471 along with the tax […]
Partnership Distributions to a Trust: How Does it Cash Flow?
Partnership Distributions to a Trust How Does It Cash Flow? 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 […]
Debunking Form 1041 – Distribution Distractors
Debunking Form 1041 – Distribution Distractors We recently received a call on the Bukers Hotline from an analyst working on spreading a trust with a Form 1041. The analyst noticed a few different line items on the first two pages of Form 1041 that appeared to resemble distributions made from the trust entity. We helped […]
Section 465d Carryover – Cash Flow Impacts
Section 465(d) Carryover – Cash Flow Impacts 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 […]
Schedule E Pass-Through Activity: Common Pitfalls for Lenders
Schedule E Pass-Through Activity: Common Pitfalls for Lenders Last month, we discussed how to avoid pitfalls on Schedule E related to passive activity losses. We are going to look at the same analyst’s question, but this time we will emphasize the potential pitfalls related to income or loss from pass-through entities. Let’s start by reviewing […]
Schedule E Passive Losses: Common Pitfalls for Lenders
Schedule E Passive Losses: Common Pitfalls for Lenders We recently received a call on the Bukers Hotline where a new analyst was trying to spread cash flow from Schedule E, which breaks out income and losses from rental and royalty activities, as well as partnerships, S corporations, and other flow-through entities. The analyst’s first inclination […]
Ordinary vs Qualified Dividends: Key Differences
Ordinary vs. Qualified Dividends: Key Differences We recently received a call on the Bukers Hotline where a new software user was trying to spread cash flow from Schedule B, which breaks out cash inflows from interest and dividends. The user was asking us how to treat ordinary and qualified dividends, suggesting that they might want […]
Hidden Expenses on Schedule C
Hidden Expenses on Schedule C We recently received a great question on the Bukers Hotline about spreading an individual’s sole proprietorship (Schedule C). Most lenders are aware that they need to add back depreciation, amortization, and interest expense as listed on Schedule C, Part II, to arrive at Total Schedule C Cash Flow. However, did […]