Cracking the Personal Tax Return Code Part 2: Form 1040, Schedules D, E & F

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StreamedMar 20, 2024Duration90 minutes
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Tax returns are almost written in a secret code.

This program and the accompanying software are the ‘magic’ code breakers you need. Determining actual cash flow from a personal income tax return is critical for a lender because borrowers don’t repay debt with taxable income; they use cash flow. Learn to accurately interpret personal tax returns and identify reliable, recurring income with this two-part series.

  • Schedule D, Capital Gains and Losses: find out if these are qualifying items or not
  • Schedule D, Page 2: eliminate the phantom incomes and find the real cash flow from partnerships and S corps
  • Schedule E, Page 1, Rentals: understand whether you need to do more than just add back depreciation to find the real net income on rentals and royalties
  • Schedule F, Farms: identify hidden incomes in farm tax returns


Tax returns don’t show cash flow; they show taxable income. What you need to know is cash flow because that is how your loan is paid back. With the process outlined in this session and the free Lenders Tax Analyzer© software each registrant receives, you will gain an easy, reliable method to convert a borrower’s personal tax return (Form 1040) into a borrower’s cash flow statement.

This is Part 2 of a two-part series. In Part 2 you will learn whether a capital gain or loss should be included in the borrower’s qualifying income. You will be able to determine the true cash flow of a rental property or royalty-generating asset. For partnerships and S corps, you will discover how to eliminate false or phantom income that passes through the 1040 and replace it with real cash flow to the owner. For farms, you will learn to break down the various incomes (and perhaps additional expenses) that can be found on Schedule F. 

When you finish this session, you will be able do a little ‘magic’ and convert taxable incomes into cash flows that you can plug into your credit scoring model, your debt-to-income ratio, or your disposable income calculation.  (Note: This session is designed for consumer and commercial lenders. This method does not follow Fannie, Freddie, or QM rules used in mortgage lending.)


This informative session is designed for lending personnel, including chief lending officers, service representatives, new accounts personnel, loan officers, loan underwriters, loan sales officers, credit analysts, loan processors, branch managers, CEOs, and other key lending staff.


  • Free copy of 2023 Lenders Tax Analyzer© software for 2023, 2022, and 2021 personal tax returns
  • Employee training log
  • Interactive quiz
  • PDF of slides and speaker’s contact info for follow-up questions
  • Attendance certificate provided to self-report CE credits

NOTE: All materials are subject to copyright. Transmission, retransmission, or republishing of any webinar to other institutions or those not employed by your institution is prohibited. Print materials may be copied for eligible participants only.


"Speaker was excellent and covered everything advertised! Thank you!"
- David, Mainstreet Community Bank of Florida

Presented By

Tim Harrington, CPATimothy P. Harrington
TEAM Resources