Schedule E, Rental property debt service (7,000) What is the customer’s personal debt service coverage ratio?
19. When considering Form 1040 “capital gains” as a source of cash in the global cash flow formula, the
A. reported gain should not be used as a source of cash, whether recurring or nonrecurring.
B. reported gain should be used as a source of cash only if subsequent asset sales are likely to take place.
C. asset selling prices should be used as a source of cash if sales proceeds were not reinvested in another asset.
D. asset selling price minus the gain should be excluded to isolate the recaptured depreciation amount.
20. When considering Form 1040 “Wages, salaries, and tips” as a source of cash in the global cash flow formula, one must recognize that the amount reported
A. is net of any pre-tax payroll allocations.
B. includes amounts not corroborated be a W-2.
C. is gross of Medicare deductions.
D. does not include wages from closely held corporations.