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A lender getting ready to take my free Online Bank Training Mini-course on Green Legos, Six Ns and a Map to Tax Returns told me just what she is looking for:
"Linda, I just want the list. What can I add back to make it easier to qualify my borrower?"So sorry, if you think there is a list, you are wrong. Well, I take that back. There may be a specific list that your company guidelines approve. It may include:
- Depreciation, amortization, depletion
- Carryovers
- NOLs
- Are repairs their normal amount, or are they higher because of the flood downtown last year?
- Are legal and professional fees about right, or are they high because they did a lot of intellectual property/trademark work last year?
- Are bad debts the usual or did they have a major client go belly-up last year? (That is a technical term.)
You cannot tell by looking, and there is no list of add-backs that has 'repairs' listed on it. So if you are looking for 'the list', get over it.
That said, there is a list of 'types of adjustments' to look for. In the next six posts, I'll cover the 6 Ns and give you a partial list of examples for each one.
- Nontaxed income
- Nondeducted expenses
- Noncash income or expenses
- New income or expenses
- Nonrecurring income or expenses
- Nondocumented income
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