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Monthly Archives: November 2011

Tax Return Analysis: Using Qualified Dividends for Cashflow

Your question:

I was wondering why the Qualified Dividends (9b) on the personal tax returns are not included in tax analysis cash flow.

Linda says:

With the challenge of qualifying borrowers we want to find and include every source of recurring cashflow possible. Add to that, we add Line 8a Tax-exempt Interest so it is natural to assume we could also add Line 9a Qualified Dividends.

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When capital gains is from an installment sale

An installment sale, where the taxpayer will receive payments over time from the sale of an asset, is treated differently in the tax return. The lender needs to spot it to find out:

  • how much the borrower is receiving each year
  • if there are balloon payments anticipated that might impact available cashflow
  • if the borrower is receiving payments as agreed
  • how much longer the contract/note receivable will create cashflow
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