Actual - Tax ReturnsAdjust to Calculate Future

Recurring Cash Flow CommentsSources of Cash Flow/Income

Salaries/Wages $647,500 $647,500Salary is derived from DL PA Inc $345M (Dora) + $302M (Brock.) Most banks request 3 years of tax returns and they adjust the cash flow to the 3-year average.

Schedule B- Interest and Dividends Interest $19,000 $19,000 Has their liquidity increase since the last PFS? Dividends $3,000 $3,000 What is the current income they receive from this assets? Less K -1 Interest and Dividends ($5,000) ($5,000) Can you verify via statements?/ Then, you can projectTotal Cash Flow from Interest and Dividends $17,000 $17,000

Schedule C - Business Cash Flow Gross Income - Expenses ($2,000) $0 They sold this business Add back - non cash expenses (depreciation, amortization) $15,000 $0 Add back - interest $11,000 $0 Add back - any one time expense $0 $0Total Schedule C - Business Cash Flow $24,000 $0

Schedule D - Capital Gains

Short Term Capital Gain - Sales Price $0 $0

Less Short Term Capital Gain - Cost $0 $0

Long Term Capital Gain - Sales Price $1,280,000 $0Total Cash Flow from Capital Gains $1,280,000 $0

Form 4797 - Sales of Business Property Sales Price $45,000 $0 Not recurring / one time event

Schedule E - Rental Income

Rental Income - Office Building $230,000 $230,000Remember that they occupy 9,000 sf of the 12,000 sf / income of this real estate property primarily depends on their practice

Less - expenses ($261,000) ($261,000) Add back - depreciation $45,000 $45,000 This is a non-cash item Add back - interest expense $80,800 $80,800 This will be reflected in the debt service section/do not double countTotal Schedule E - Rental Income $94,800 $94,800

Schedule K-1 Are the contributions/distributions required or discretionary? K-2 Shopping Center ltd - contributions ($10,000) ($10,000) How much more the client needs to contribute on the following years? K-2 Shopping Center ltd - distributions $4,000 $4,000 Mt. Vison Shopping Center - contributions ($20,000) ($20,000) How much more the client needs to contribute on the following years? Mt. Vison Shopping Center - distributions $1,600 $1,600 DL PA Inc (Brock Logan's practice) - distribution $15,000 $15,000 These depend on how well the client is doing in there practices BL PA Inc (Dora Logan's practice) - distribution $9,000 $9,000Total Cash Flow - Schedule K -1 ($400) ($400)

Total Cash Flow $2,083,900 $758,900

Uses of Cash FlowTaxes (estimated at 35% of taxable income/projected income) $416,675 $265,615 lower taxes on the following year/no capital gains

Personal Expenses (estimated at 15% of taxable income/projected income) $178,575 $113,835 each bank has its policy regarding personal expenses

Debt Service - Current Loans

Line of Credit $300,000 $0 $0 refinanced - $600M unsecured LOCOther Note Payable (7) $0

Auto loans $70,000 $25,000 $25,000 via credit bureau Boat loan $190,000 $15,000 $15,000 via credit bureauMortgage Debt (8) Residence $1,250,000 $0 $0 refinanced Office Bldg $1,560,000 $0 $0 refinanced Lots $200,000 $45,647 $45,647 ask client to provide the repayment terms

Requested Proposed

Prime Bank - $1.5MM loan (Office Building) $1,425,000 $103,208 $103,208What happened to the $160M sellers note/ we need to add that to the refi/LTV needs to be 75%

Unsecured $600M Loc at Prime Bank (interest only) $600,000 $176,931 $176,931 assumes 4 year amo/2% above proposed rate Residential mortgage - $1,750M $1,540,000 $80,426 $80,426 even if it is an arm used 30 year DS/ what happens after the 7 years?

RE taxes and insurance are considered DS $54,000*also consider property taxes & insurance (Get this from - Public records/Mortgagearea/client)

Not diclosed debt Sellers note - $160M loan (Office Building) int only 3 years/then fully amortized

Total Uses of Cash Flow $1,041,463 $879,663

Net Cash Flow $1,042,437 ($120,763)

Total DS $446,213 $446,213DTI 21% 59% Normally the cut off is 50% DTI (DS to CF). What are your mitigants

Most cash flow derived from capital gains is not recurring. Therefore, this cash flow will not be available to cover the client's expenses and cash flow needs. Note: some banks allow some specific calculations for asset dissipation. If you do asset dissipation, make sure you deduct the interest/dividends of the assets being dissipated if you choose to use asset dissipation