Deciphering Tax Returns Part 1: Form 1040, Schedules B & C

Is taxable income different than cash flow? Most often, the answer is a big “YES!” Using tax returns to determine borrowers’ cash flow to service their debt is as challenging as ever. Join us to learn the latest techniques to sort out all that tax data and find exactly the information you need.

 AFTER THIS WEBINAR YOU’LL BE ABLE TO:

• Turn a tax return into a borrower’s cash flow report
• Understand the concept of using recurring incomes as cash flow – and ignoring the rest
• Determine cash flows from interest-earning investments and dividend-producing investments, etc. from Schedule B: Interest and Dividends

• Correctly account for the pass-through interest and dividend incomes earned from partnerships and S corporations reported on Schedule B
  • Note: partnership and S Corp supplemental income will be covered in Part 2

• Identify hidden incomes and a hidden expense in a sole proprietorship via Schedule C

WEBINAR DETAILS

Tax returns don’t show cash flow; they show taxable income. What you need to know is cash flow because that is how your loan is paid back. With the process outlined in this session and the free Lenders Tax Analyzer© software each registrant receives, you will gain an easy, reliable method to convert a borrower’s personal tax return (Form 1040) into a borrower’s cash flow statement.

This is Part 1 of a two-part series. In Part 1, you will learn to cash flow the front page of Form 1040, Schedule B (interest and dividend incomes) and Schedule C (sole proprietorship incomes). When you finish these sessions, you will be able do a little ‘magic’ and convert taxable incomes into cash flows that you can plug into your credit scoring model, your debt-to-income ratio, or your disposable income calculation. (Note: This series is designed for consumer and commercial lenders. This method does not follow Fannie, Freddie, or QM rules used in mortgage lending.)

 WHO SHOULD ATTEND?

This informative session is designed for lending personnel, including chief lending officers, service representatives, new accounts personnel, loan officers, loan underwriters, loan sales officers, credit analysts, loan processors, branch managers, CEOs, and other key lending staff.