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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13119
Experience:  15years with H & R Block. Divisional leader, Instructor
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I have a house that I rent out. A prospective tenant has to

Customer Question

I have a house that I rent out. A prospective tenant has to is self-employed and uses his S-Corps as tax shelters. He would like to use his K-1 as income verification. He is telling me that box 1 (Ordinary Business Income) is the business' net income (not gross). Can you verify this?
If so, is there any reason I shouldn't accept this as proof of income?
Submitted: 2 months ago.
Category: Tax
Expert:  Robin D. replied 2 months ago.


The amount reported in box 1 is the share of the ordinary income (loss) from trade or business activities of the corporation.

If you are wanting to know if he would have the ability to meet the rent obligation, tax returns and tax forms (like a K1) are not designed to provide a clear picture of cash flow. Instead, tax returns report taxable income and deductible expenses.

You can accept his proof of business income but a poor personal credit history could indicate a cash flow problem (or if there is no problem) better.

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