Form 1084 (2015) - Cash Flow Analysis Template (Page 6 of 8) in pdf

Partnership or S Corporation

IRS Form 1065 – Partnership Income

7. Schedule K-1 Form 1065 – Partner’s Share of Income:

Line 7a - Ordinary Income (Loss): Record the amount of ordinary income (loss) reported to the borrower in Box 1 of

Schedule K-1 (Form 1065).

Line 7b - Net Rental Real Estate; Other Net Income (Loss): Record the amount of net rental real estate; other net

income (loss) reported to the borrower in Box 2 and/or 3 of Schedule K-1 (Form 1065).

Line 7c - Guaranteed Payments to Partner: Add guaranteed payments to partner when the borrower has a two-

year history of receipt.

8. Adjustments to Business Cash Flow – Form 1065

When business tax returns are obtained by the lender, the following adjustments to business cash flow should be made.

Line 8a - Ordinary income (loss) from other Partnerships: In order to consider ordinary income from other

partnerships, the lender must obtain additional documentation to confirm the income passed through from the other

partnership to the borrower’s business meets partnership income eligibility standards. Deduct ordinary income passed

through to the borrower’s business from other partnerships unless this additional action is taken. Losses passed

through to the borrower’s business may be added back when the lender determines pass-through losses are not likely

to continue.

Line 8b - Nonrecurring Other (Income) Loss: Other income reported on Form 1065 generally represents income

that is not directly related to business receipts. Deduct other income unless the income is determined to be recurring.

If the income is determined to be recurring, no adjustment is required. Other loss may be added back when it is

determined that the loss will not continue.

Line 8c - Depreciation: Add back the amount of the depreciation deduction reported on Form 1065 and/or on Form

8825.

Line 8d - Depletion: Add back the amount of the depletion deduction reported on Form 1065.

Line 8e - Amortization/Casualty Loss: Add back the expense deducted for amortization/depletion along with the

expense associated with non-recurring casualty loss.

Line 8f - Mortgage or Notes Payable in Less than 1 Year: Subtract the amount of mortgage or note obligations

payable in less than one year, as reported in Schedule L of Form 1120S, end of year column. This deduction is not

required for lines of credit or if there is evidence that these obligations roll over regularly and/or the business has

sufficient liquid assets to cover them.

Line 8g - Non-deductible Travel and Entertainment Expenses: Deduct the portion of business-related expenses

(travel, meals, and entertainment) reported on Schedule M-1 of Form 1065 that have been excluded for tax reporting

purposes. These expenses, to the full extent they are incurred, are taken into account; therefore, the portion of these

expenses that have been excluded must be identified and subtracted from business cash flow.

Line 8h - Subtotal: Total lines 8a – 8g.

Line 8i - Form 1065 Total: To arrive at the borrower’s proportionate share of adjustments to business cash flow,

multiply the subtotal (line 8h) by the borrower’s percentage of ownership (the borrower’s ending percentage of capital

ownership as reported on the Schedule K-1 (Form 1065)).

IRS Form 1120S – S Corporation Earnings

9. Schedule K-1 Form 1120S – Shareholder’s Share of Income

Instructions

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