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      🗓️ Recorded: 7/17/2025
      ⏱️ Est. Time: 60 mins
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      Zeroing in Partnerships & LLCs

      This presentation focuses on the specialized process of evaluating and calculating qualifying income for borrowers who are part of a Partnership, specifically utilizing Tax Year 2024 data.

      What this session covers:

       
      Self-Employment Threshold In mortgage lending, a borrower is considered self-employed if they own 25% or more of an active business.
       
      Partnership Structure A legal arrangement between two or more people where profits and losses pass through to individual partners who pay tax on their share.
       
      Key Tax Documentation Lenders rely on IRS Form 1065 (Partnership Return) and Schedule K-1 to identify ownership percentage and the borrower's specific share of income.
       
      Income Components Qualifying income often consists of Guaranteed Payments to the partner and their share of Ordinary Business Income.
       
      Cash Flow Adjustments Taxable income is converted to qualifying cash flow by adding back noncash expenses (like depreciation) and subtracting nonrecurring gains.
       
      Business Stability Lenders must determine if the business has a history of distributing income and if current trends support the likelihood that cash flow will continue.
    • Related Documents File

      Presentation handout
      SEB documentation matrix
      SEB resource manual
      SEB K-1 income flow
      Get access to our self-employed income calculators