1. law, govt and politics
2. legal issues
3. civil law
4. copyright

How to Read Tax Returns and
Close More Loans
Presented by David Kuiper
MBA, CMA, CMPS
1
About David Kuiper
David started in mortgage banking in 1990. He graduated from
Hope College in 1988 with degrees in Pre-Med Physiology and
Business Administration. He also holds an MBA in finance from Grand
Valley State University and is a Certified Mortgage Planning Specialist
•
•
•
•
•
•
Rated as one of the top mortgage loan officers in the
country
Closed over 5500 loans totaling in excess of $900,000,000
Nationally recognized author, speaker and trainer
Teaching faculty of Loan Toolbox and Mortgage Planner
University.
Expert on First Impressions and Building Client Intimacy.
David, his wife Michelle, five children, two cats and a dog
live in Holland MI and Fort Myers FL.
Copyright © MortgageCurrentcy.com
2
Today’s Seminar Will:

Give you an overview of how to read tax
returns & understand why

Learn how to find “hidden” cash flow in
tax returns & write more loans

Narrative and forms for downloading
Copyright © MortgageCurrentcy.com
3
When are tax returns needed?
1.
A borrower is considered self-employed when they own
25% or more interest in a business. This is when the
taxes would be required to calculate the borrower’s
income.
2.
When 25% or more of the income is from other than base
salary. Examples of this are if the borrower’s income
comes 25% or more from overtime, bonuses,
commissions or piecework.
3.
Tax Returns are necessary if the borrower works for a
family-owned business.
4.
If the borrower has rental income, analyzing the tax return
will determine if there is net income or loss from the rental
income.
Copyright © MortgageCurrentcy.com
4
Different types of self employed
borrowers:
Sole Proprietorship – A business owned by one person. The individual
owner is personally liable for all debts of the business and therefore has
unlimited liability. Income or loss is reported on Schedule C, Form 1040, the
individual tax return.
Partnership – When two or more individuals form a business. The partners
share profits and categories, General Partnership and Limited Partnerships.
General Partnership – Each partner is personally liable for the debts of the
whole business; however, business creditors are required to attach business
assets first. Personal creditors cannot access partnership assets.
S Corporation – Generally, a small, start-up business that is taxed in the same
manner as a partnership.
Corporation – A state-chartered business owned by stockholders, wherein the
stockholder is not personally responsible for the debts of the corporation. The
profits (retained earnings) are put back into the business, or are distributed to
stockholders as dividends. Corporations report their income and losses on the
U.S. Corporation Income Tax Return, Form 1120.
Copyright © MortgageCurrentcy.com
5
Cash Flow Analysis Worksheet
Copyright © MortgageCurrentcy.com
6
Form 1040
Personal Individual
Tax Return
Copyright © MortgageCurrentcy.com
david kuiper mortgage team
7
Form 1040
(Page 2)
Personal Individual
Tax Return
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
8
Schedule A
Itemized
Deductions
Copyright © MortgageCurrentcy.com
david kuiper mortgage team
9
Schedule A
(Page 2)
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
10
Schedule B
Interest &
Ordinary Dividends
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
11
Form 2106
Employee Business
Expenses
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
12
(Page 2)
Form 2106
Employee Business
Expenses
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
13
Schedule C
Profit or Loss
from Business
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
14
Schedule C
(Page 2)
Profit or Loss
from Business
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
15
Form 4562
Depreciation &
Amortization
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
16
Form 4562
(Page 2)
Depreciation &
Ammortization
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
17
Schedule D
Capital Gains
& Losses
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
18
Schedule D
(Page 2)
Capital Gains
& Losses
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
19
Form 6252
Installment
Sale Income
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
20
Instructions for
Form 6252
Installment
Sale Income
Copyright © MortgageCurrentcy.com
21
Instructions for
Form 6252
Installment
Sale Income
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
22
Instructions for
Form 6252
Installment
Sale Income
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
23
Form 4797
Sales of
Business Property
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
24
Form 4797
(Page 2)
Sales of
Business Property
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
25
Schedule E
Supplemental
Income & Loss
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
26
Schedule E
(Page 2)
Supplemental
Income & Loss
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
27
Form 8582
Passive Activity
Loss Limitations
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
28
Form 8582
(Instructions)
Passive Activity
Loss Limitations
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
29
Form 8582
(Instructions)
Passive Activity
Loss Limitations
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
30
Schedule F
Profit or Loss
from Farming
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
31
Schedule F
(Page 2)
Profit or Loss
from Farming
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
32
Form 1065
Return of
Partnership Income
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
33
Form 1065
(Page 2)
Return of
Partnership Income
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
34
Form 1065
(Page 3)
Return of
Partnership Income
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
35
Form 1065
(Page 4)
Return of
Partnership Income
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
36
Form 1065
(Page 5)
Return of
Partnership Income
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
37
Scheule K-1 of
Form 1065
Partner’s Share of
Income,
Deductions,
Credits, etc.
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
38
Scheule K-1 of
Form 1065
(Page 2)
Partner’s Share of
Income,
Deductions,
Credits, etc.
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
39
Form 1120S
Income Tax Return
for an S Corporation
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
40
Form 1120S
(Page 2)
Income Tax Return
for an S Corporation
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
41
Form 1120S
(Page 3)
Income Tax Return
for an S Corporation
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
42
Form 1120S
(Page 4)
Income Tax Return
for an S Corporation
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
43
Schedule K-1 of
Form 1120S
Shareholder’s
Share of Income,
Deductions, Credits,
etc.
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
44
Form 1120
U.S. Corporation
Income Tax Returns
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
45
Form 1120
(Page 2)
U.S. Corporation
Income Tax Returns
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
46
Form 1120
(Page 3)
U.S. Corporation
Income Tax Returns
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
47
Form 1120
(Page 4)
U.S. Corporation
Income Tax Returns
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
48
Form 1120
(Page 5)
U.S. Corporation
Income Tax Returns
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
49
Now you know…
Depreciation
 Depletion
 Amortization
 Business Use in Home
 Depreciation from mileage

Copyright © MortgageCurrentcy.com
50
Cash Flow Analysis
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
51
Cash Flow Analysis
(Page 2)
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
52
Cash Flow Analysis
(Narrative)
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
53
Cash Flow Analysis
(Narrative)
david kuiper mortgage team
Copyright © MortgageCurrentcy.com
54
Cash Flow Analysis
(Narrative)
Copyright © MortgageCurrentcy.com
55
Downloads available with this
course
…(downloads available on the original page where you accessed
this class)

Cash Flow Analysis
Worksheet

Narrative of Cash
Flow Analysis

Copies of Tax
Returns, Schedules,
with comments
Copyright © MortgageCurrentcy.com
56
Test Yourself…

Find old file/self-employed

Cash Flow Analysis Worksheet

Work thru Tax Returns

Did you get the same income as the
Underwriter?
Copyright © MortgageCurrentcy.com
57
Sample Script…
“I’m an expert in analyzing tax returns. Before
we make the judgment that you don’t have
enough income, or that business was not so
great, let me take a look at your tax returns. We
can then make the best recommendations for
you.”
Copyright © MortgageCurrentcy.com
58
Tips…

Ask for “complete” tax returns

Go directly to CPA or Financial Planner

Email to you

Stop by and introduce yourself
Copyright © MortgageCurrentcy.com
59
Become a
“Self-Employed” Expert
Higher loan balances
 Working relations with processor/UW
 Connect with CPA/Financial Planner
 Find more income
 Save deals for your real estate agents
 More referrals

Copyright © MortgageCurrentcy.com
60
Tax Return Extensions

Last 2 year’s tax returns

Current profit & loss statements

FHA – Also most recent quarterly
statement
Copyright © MortgageCurrentcy.com
61
In Closing (no pun intended)

Highlight income you can use

Transfer to Cash Flow Analysis Form

Leave Taxes with you to review
Copyright © MortgageCurrentcy.com
62
Copyright © MortgageCurrentcy.com
63
How to Read Tax Returns Class
Brought to you by:
www.MortgageCurrentcy.com
Questions?
David Kuiper
Certified Mortgage Planning Specialist
616.546.9250 Direct
[email protected]
Copyright © MortgageCurrentcy.com
64