Cash Flow Analysis/ ATR

Question 1

For every deficiency on underwriting there must be a ___________.

Answer 1

mitigating factor

Question 2

Verification of _____________ is required on all ATR covered loans.

Answer 2

Employment

Question 3

____________ and ____________ have to be 3rd party verified.

Answer 3

Income, Assets

Question 4

The stated interest should be listed on ATR underwriting. (T/F)

Answer 4

False, the fully indexed rate should be listed

Question 5

Schedule B from tax return details what?

Answer 5

Interest and Dividends Income

Question 6

What does Schedule C from a tax return cover?

Answer 6

Profit and Loss from Business

Question 7

What are two examples of line items that don’t actually deal with cash flow?

Answer 7

1) depletion

2) depreciation

Question 8

What must be done with depreciation and other non-cash items?

Answer 8

Must add back as income since they were not true expenses

Question 9

Meals and entertainment only get to expense _________ of actual expense, therefore needs to add other ___________ into ‘___________ meals and entertainment.’

Answer 9

Half, half, non-deductible

Question 10

What should be done with ‘home use for business’ on a schedule C?

Answer 10

It should be added back because it was not a true cash expense.

Question 11

What does a schedule D cover?

Answer 11

Capital Gains and Losses

Question 12

What do we generally not do with Capital Gains and Losses?

Answer 12

Project them

Question 13

How much does IRS allow for losses in regards to Capital Gains and Losses per year?

Answer 13

$3,000

Question 14

What must be done with individuals who lost more than $3,000 from Capital Losses?

Answer 14

Must add anything above $3,000 back in the supplemental schedule.

Question 15

What two primary categories does the schedule E cover from a tax return?

Answer 15

1) Income from Rentals

2) S-corp and Partnership Income

Question 16

What must be done with all rental income (loss) in the supplemental schedule?

Answer 16

Must back it out and start at ‘0’

Question 17

After rental income (loss) is ___________, THEN enter information from _________ into supplemental schedule under _____________.

Answer 17

Backed out, Schedule E, ‘Rental Detail’

Question 18

What expense from a mortgage must be added back?

Answer 18

Mortgage Interest and Depreciation

Question 19

What tax forms are generally included with partnership income?

Answer 19

K-1

Question 20

ALL income from S Corps and Partnerships must be backed out. (T/F)

Answer 20

True

Question 21

What line is the total tax found on?

Answer 21

Line 63

Question 22

Line 15a - 15b on a tax return accounts for what?

Answer 22

The non-taxed portion of income that needs to be added and grossed up 1.25.