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I am trying to provide my mortgage company with business

Customer Question
hi- I am trying to...
hi- I am trying to provide my mortgage company with business income info from my business to show my income. I only take a draw- no pay check. How should this be showing up on my P&L statements?
Submitted: 2 years ago.Category: Finance
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Answered in 2 hours by:
9/24/2015
Financial Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 12,846
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi,

...

If your are "self-employed," (partner, sole proprietor, LLC taxed as a partnership) then the PROFITS are what is available to you.

...

The draws are just your using of that profit (stays as part of your basis in the entity if you don't pull it out).

...

You documentation of that IS your Schedule C (shows up on business income or loss) ,line 12, of the 1040 if you're a sole proprietor or single member LLC.

...

If you're a partner the K-1 from the partnership flows to Schedule E and then line 17 of the tax return.

...

If you're an S-Corp shareholder/employee then you'll have your W-2 AND the K-1 with any incremental profit from the 1120-S.

...

It sounds like you're probably a sole proprietor, LLC member, or partner. And for those it's simple; your year end profit IS the number ... and the "draws" are your USING of that profit (OR pulling equity or prior accumulate profit, in any year that you're NOT profitable).

...

You should also be aware that the mortgage underwriter (in that scenario) where you're a "self employed" person (and again that's a specific term, in tax lingo ... means you're not an employee of your company) should allow you to add-back any non-cash items that LOWERED that profit like depreciation.

...

Let me know if you have questions

...

Lane

.

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Customer reply replied 2 years ago
Thanks for the help....so my 2014 taxes show 143,000 for net profit on my schedule C. I would use that as income correct?
Financial Professional: Lane, JD, CFP, MBA, CRPS replied 2 years ago

That's right.

...

That net profit will flow from the schedule C to line 12 (Business income of loss) on the 1040.

...

I hope this has all helped

...

Lane

...

If this HAS helped, and you don’t have additional questions on this, your positive rating … (by clicking or touching the stars or smileys on your screen) … would be appreciated!That’s the only way I'll be credited a portion of what you've paid JustAnswer.

.

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Lane
Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
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