Personal Income Tax Returns and Cash Flow
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In this 4th course of the Federal Tax Return Analysis Skill Series, participants will review the purpose of personal income tax returns, examine information on various schedules, identify relationships between business and personal tax returns, manually construct a personal cash flow statement, and asses guarantor cash support.
Certificate
1 credit or $295
Cost
1.5 - 2 Hrs.
Duration
1 hr.
Prep Time
1
Quiz
Overview
In the fourth webinar session, participants review the fundamental purpose of personal income tax returns. They examine the information content and cash or non cash amounts reported on Schedules A, B, C, D, E and appropriate Schedules K-1. They identify the relationship between business income tax returns and personal income tax revenue and expenses for owners and partners of pass-through entities. Further, participants conduct a step-by-step manual construction of a personal cash flow statement using information from the personal financial statement, the personal income tax returns, and accrual financial statements for the borrower. As the final step in the webinar, they assess whether a personal cash flow surplus or a guarantor's liquid personal assets is the best estimate of guarantor cash support in a business crisis.
Who Should Take This Course
This Course is ideal for participants currently in or aspiring to enter the following job functions:
- Credit Management
- Commercial Credit Administration
- Commercial Loan Administration
- Commercial Loan Portfolio Management
- C & I Lending
- Corporate Lending
- Loan Review
- Special Assets
- Internal Audit
- Non-Profit and Municipality Lending
- Health Care Provider Lending
- Specialized Lending
- Credit Analysis
Prerequisites
Familiarity with accrual financial statements and the use of ratios and cash flow statements in assessing borrower risk.
Objectives
By the end of the webinar session, participants will be able to:
- State the purpose, format, and content of personal income tax returns, including Form 1040, the major supporting schedules, and associated statements.
- Identify the differences between personal taxable revenue and expenses and personal cash revenue and cash expenses indicated by information on Form 1040, the major supporting schedules, and Schedules K-1.
- Track the migration of revenue and expense information from business income tax returns to personal income tax returns for owners of Subchapter S corporations, partnerships, limited liability companies, and sole proprietorships.
- Construct a personal cash flow statement from information on a guarantor's personal financial statement and personal income tax returns to determine the guarantor's dependency on cash flows from the business he or she owns in whole or in part.
- Assess the value of guarantor cash support based on his or her personal cash flow statement and access to highly liquid assets in the event of a company cash flow crisis.
- Determine whether personal cash flow or access to highly liquid personal assets is the better indicator of guarantor cash support for business debt service obligations in a company cash flow crisis.
Materials(access provided with registration)
- Credit Refresher on Personal Cash Revenue
- Personal Financial Statement and Form 1040 Excerpts for Douglas McPherson
- Financial Statements for Sandover Contractors, Inc.
- Exercise for the Session 4 Webinar
- Webinar Presentation Slides
- Webinar Poll Questions
- Webinar Poll Solutions
- Exercise Solutions
This is Course 4 of 8 in the Federal Tax Return Analysis Skill Series
Business Income Tax Returns
The Section 179 Deduction
Understanding Schedules K-1
Personal Income Tax Returns and Cash Flow
Schedule M-1 and the Accrual Income Statement
Business Income Tax Returns and Ratio Analysis
Business Income Tax Returns and Cash Flow Analysis
Cash Based Income Tax Returns
