Mayram Aram was on Hedgecock today

[Chance the Gardener]

Income tax is on income, not the increase in value of your business. There needs to be a realization event to be taxed on the increase in value of your business, like a sale. Any goodwill you build up in your business (=sale price – book value) will be taxed on the way out (taxable gain = sale price – adjusted basis). If your business has value, you can borrow against that – shouldn’t need to state or prove your income. If your business isn’t good collateral then you should have to put up your tax returns to show a steady income stream. If your taking your income in cash and not claiming it as income, you certainly shouldn’t be allowed to count on that to support a higher ltv. You could use cash toward the down payment though.

I wonder if the IRS has considered using stated income statements against taxpayers in actions to recover taxes on unclaimed income. Its a sworn statement, made by the party being prosecuted. I would think the dead beat would be estopped from claiming his income was less. That would be great – might put some of the blame for this loan mess where it needs to be placed.

[ucodegen]

The real thing that probably happening is that the person who complained was probably not reporting all of their income to the IRS(tax fraud). Stated income is not really available, but full doc using tax returns is. In fact, the bank will probably like them better because they will get a better idea of your cash flow position and what amount of debt service cost you could really handle. The full doc works for self-employed quite well.. that is if they are reporting all of their income…

@drunkle
i recall self employed people have always had more trouble getting loans than employees. might have to do with the kind of jobs he does, consistency of income on a yearly basis, plain old crappy accounting… and possibly fudging of numbers…

Emphasis is mine. Probably the last two. Inconsistent income can be offset if you have savings. It is hard to offset crappy accounting(makes mortgage people nervous, since some actually have an accounting/finance background). Fudging of number can really kill the deal. Want to kill a deal with a bank? make the bank uncertain as to the honesty in your numbers (though this wasn’t true for the last 4 years or so.). Yes, Mr Loan officer, I really make more income than is shown on that 1040.. I just don’t want to talk about it.

[ucodegen]

The real thing that probably happening is that the person who complained was probably not reporting all of their income to the IRS(tax fraud). Stated income is not really available, but full doc using tax returns is. In fact, the bank will probably like them better because they will get a better idea of your cash flow position and what amount of debt service cost you could really handle. The full doc works for self-employed quite well.. that is if they are reporting all of their income…

@drunkle
i recall self employed people have always had more trouble getting loans than employees. might have to do with the kind of jobs he does, consistency of income on a yearly basis, plain old crappy accounting… and possibly fudging of numbers…

Emphasis is mine. Probably the last two. Inconsistent income can be offset if you have savings. It is hard to offset crappy accounting(makes mortgage people nervous, since some actually have an accounting/finance background). Fudging of number can really kill the deal. Want to kill a deal with a bank? make the bank uncertain as to the honesty in your numbers (though this wasn’t true for the last 4 years or so.). Yes, Mr Loan officer, I really make more income than is shown on that 1040.. I just don’t want to talk about it.

[ucodegen]

The real thing that probably happening is that the person who complained was probably not reporting all of their income to the IRS(tax fraud). Stated income is not really available, but full doc using tax returns is. In fact, the bank will probably like them better because they will get a better idea of your cash flow position and what amount of debt service cost you could really handle. The full doc works for self-employed quite well.. that is if they are reporting all of their income…

@drunkle
i recall self employed people have always had more trouble getting loans than employees. might have to do with the kind of jobs he does, consistency of income on a yearly basis, plain old crappy accounting… and possibly fudging of numbers…

Emphasis is mine. Probably the last two. Inconsistent income can be offset if you have savings. It is hard to offset crappy accounting(makes mortgage people nervous, since some actually have an accounting/finance background). Fudging of number can really kill the deal. Want to kill a deal with a bank? make the bank uncertain as to the honesty in your numbers (though this wasn’t true for the last 4 years or so.). Yes, Mr Loan officer, I really make more income than is shown on that 1040.. I just don’t want to talk about it.

[ucodegen]

The real thing that probably happening is that the person who complained was probably not reporting all of their income to the IRS(tax fraud). Stated income is not really available, but full doc using tax returns is. In fact, the bank will probably like them better because they will get a better idea of your cash flow position and what amount of debt service cost you could really handle. The full doc works for self-employed quite well.. that is if they are reporting all of their income…

@drunkle
i recall self employed people have always had more trouble getting loans than employees. might have to do with the kind of jobs he does, consistency of income on a yearly basis, plain old crappy accounting… and possibly fudging of numbers…

Emphasis is mine. Probably the last two. Inconsistent income can be offset if you have savings. It is hard to offset crappy accounting(makes mortgage people nervous, since some actually have an accounting/finance background). Fudging of number can really kill the deal. Want to kill a deal with a bank? make the bank uncertain as to the honesty in your numbers (though this wasn’t true for the last 4 years or so.). Yes, Mr Loan officer, I really make more income than is shown on that 1040.. I just don’t want to talk about it.

[ucodegen]

The real thing that probably happening is that the person who complained was probably not reporting all of their income to the IRS(tax fraud). Stated income is not really available, but full doc using tax returns is. In fact, the bank will probably like them better because they will get a better idea of your cash flow position and what amount of debt service cost you could really handle. The full doc works for self-employed quite well.. that is if they are reporting all of their income…

@drunkle
i recall self employed people have always had more trouble getting loans than employees. might have to do with the kind of jobs he does, consistency of income on a yearly basis, plain old crappy accounting… and possibly fudging of numbers…

Emphasis is mine. Probably the last two. Inconsistent income can be offset if you have savings. It is hard to offset crappy accounting(makes mortgage people nervous, since some actually have an accounting/finance background). Fudging of number can really kill the deal. Want to kill a deal with a bank? make the bank uncertain as to the honesty in your numbers (though this wasn’t true for the last 4 years or so.). Yes, Mr Loan officer, I really make more income than is shown on that 1040.. I just don’t want to talk about it.

[drunkle]

uco:

the link i posted suggested two things. that loans to the self employed are more laborious for the loan borker and that documentation does include tax documents taken directly from the irs. so personal accounting may be out as the banks may not bother looking at your books.

other thoughts… maybe he *needs* the stated income loan in order to get the deal done in time? waiting for the irs to send the loan officer paperwork is too slow? whatever the case, he’ll probably be better off being denied at this point, that the loan guy is doing him a favor?

[drunkle]

uco:

the link i posted suggested two things. that loans to the self employed are more laborious for the loan borker and that documentation does include tax documents taken directly from the irs. so personal accounting may be out as the banks may not bother looking at your books.

other thoughts… maybe he *needs* the stated income loan in order to get the deal done in time? waiting for the irs to send the loan officer paperwork is too slow? whatever the case, he’ll probably be better off being denied at this point, that the loan guy is doing him a favor?

[drunkle]

uco:

the link i posted suggested two things. that loans to the self employed are more laborious for the loan borker and that documentation does include tax documents taken directly from the irs. so personal accounting may be out as the banks may not bother looking at your books.

other thoughts… maybe he *needs* the stated income loan in order to get the deal done in time? waiting for the irs to send the loan officer paperwork is too slow? whatever the case, he’ll probably be better off being denied at this point, that the loan guy is doing him a favor?

[drunkle]

uco:

the link i posted suggested two things. that loans to the self employed are more laborious for the loan borker and that documentation does include tax documents taken directly from the irs. so personal accounting may be out as the banks may not bother looking at your books.

other thoughts… maybe he *needs* the stated income loan in order to get the deal done in time? waiting for the irs to send the loan officer paperwork is too slow? whatever the case, he’ll probably be better off being denied at this point, that the loan guy is doing him a favor?

[drunkle]

uco:

the link i posted suggested two things. that loans to the self employed are more laborious for the loan borker and that documentation does include tax documents taken directly from the irs. so personal accounting may be out as the banks may not bother looking at your books.

other thoughts… maybe he *needs* the stated income loan in order to get the deal done in time? waiting for the irs to send the loan officer paperwork is too slow? whatever the case, he’ll probably be better off being denied at this point, that the loan guy is doing him a favor?

[CMcG]

ucodegen —

Back in the mid-eighties, my spouse and I were both self-employed and wrote off a lot of our income. I told our CPA at tax time that we wanted to buy our first home but were afraid we wouldn’t qualify. He said, “Here’s how a lot of people do it — they have two sets of tax returns made — one for lenders and one for the IRS. I recommend it.” This shocked me. We ended up not buying till one of us got a regular W-2 job. I think this is why nowadays, as it says in a link that another poster offered earlier in the thread, lenders often require that the IRS provide the tax return, not the borrower.

Rustico–

I think you are right that the caller to Aram probably didn’t have enough in reserves. I forgot to mention in my original post that the caller said he and his wife both have excellent credit, so I am assuming FICOs of at least 700.

[CMcG]

ucodegen —

Back in the mid-eighties, my spouse and I were both self-employed and wrote off a lot of our income. I told our CPA at tax time that we wanted to buy our first home but were afraid we wouldn’t qualify. He said, “Here’s how a lot of people do it — they have two sets of tax returns made — one for lenders and one for the IRS. I recommend it.” This shocked me. We ended up not buying till one of us got a regular W-2 job. I think this is why nowadays, as it says in a link that another poster offered earlier in the thread, lenders often require that the IRS provide the tax return, not the borrower.

Rustico–

I think you are right that the caller to Aram probably didn’t have enough in reserves. I forgot to mention in my original post that the caller said he and his wife both have excellent credit, so I am assuming FICOs of at least 700.

[CMcG]

ucodegen —

Back in the mid-eighties, my spouse and I were both self-employed and wrote off a lot of our income. I told our CPA at tax time that we wanted to buy our first home but were afraid we wouldn’t qualify. He said, “Here’s how a lot of people do it — they have two sets of tax returns made — one for lenders and one for the IRS. I recommend it.” This shocked me. We ended up not buying till one of us got a regular W-2 job. I think this is why nowadays, as it says in a link that another poster offered earlier in the thread, lenders often require that the IRS provide the tax return, not the borrower.

Rustico–

I think you are right that the caller to Aram probably didn’t have enough in reserves. I forgot to mention in my original post that the caller said he and his wife both have excellent credit, so I am assuming FICOs of at least 700.

[CMcG]

ucodegen —

Back in the mid-eighties, my spouse and I were both self-employed and wrote off a lot of our income. I told our CPA at tax time that we wanted to buy our first home but were afraid we wouldn’t qualify. He said, “Here’s how a lot of people do it — they have two sets of tax returns made — one for lenders and one for the IRS. I recommend it.” This shocked me. We ended up not buying till one of us got a regular W-2 job. I think this is why nowadays, as it says in a link that another poster offered earlier in the thread, lenders often require that the IRS provide the tax return, not the borrower.

Rustico–

I think you are right that the caller to Aram probably didn’t have enough in reserves. I forgot to mention in my original post that the caller said he and his wife both have excellent credit, so I am assuming FICOs of at least 700.

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