All Forum Posts by: Pete Smith

Chris

Thanks for the feedback.

Question #2: 

For purposes of qualifying for a loan:

- Could I sell a majority of the shares in the LLC to someone who would benefit from the losses so that I would only

  show a minimal loss that would not nix my loan application. They would be passive owners and I would remain the

manager of the LLC. The sales agreement would extend me the option to repurchase their shares in the LLC at

  some future date for their purchase amount plus a specified annual fee, for each year they held it or some 

  fractional amount thereof. Avoiding compound interest. Of course as majority owners they would have the right

  to replace me as the managing member, but I don't see that as a risk.

Although this would be a legitimate business transaction would it somehow be construed as misleading by lenders?

Would they even care?

-Pete

Ran into a problem trying to qualify for a VA loan. My income and credit reports were fine and I qualify for the amount I'm seeking but...

I'm the majority shareholder and managing member of an LLC which consolidates some past businesses which failed and the LLC

holds the loans that were not repaid, (including a loan to me). My hope is that over time, some other ventures that the LLC is getting

into will start to pay off those debts.

Naively I though that profits and losses were not passed on to the members of the LLC until there was an official disbursement.

Apparently not so, it appears the losses are passed through to the share holders of the LLC in the same ratio as the percentage

of their share ownership in the LLC.

For tax purposes, the loss reported on my K1 shown on my Federal and state taxes, only records the loss, as there is not enough 

income to offset it.  

However apparently lenders treat such losses differently. They treat those losses as a reduction in income. As those losses are

substantial they reduce my income to the point that I no longer qualify for the loan amount that I'm applying for.

My question: is treating the LLC losses in such a manner, a nationwide lending industry standard or are there banks that may

treat the losses in the same manner as they're treated for tax purposes.

Before giving up on getting a VA loan, wanted to make sure that I didn't leave any stones unturned.

-Pete

Jim

Thanks for the feedback. I did change the payment to 0 so the values then were:

- RATE = .08/12

- NPER = 60

- PMT = 0

- PV = -$1,000.00

Then FV comes out as: $1,489.85

Closer to the original, but still not equal. I'm still not understanding why It's not producing the same result.

Given a loan of $1,000  with the following terms

- AMT = $1,000.00

- NPER  = 60 (5 yrs on mthly pymts)

- RATE = 8% (Annual rate) (i.e. .08/12 per term)

Then:

- PMT = $20.28

- Total AMT repaid = (60 * $20.28)  = $1,216.58

All well and good so far....

Am assuming that the future value (FV) of the $1,000.00 using the same values as for the loan, would likewise come out to $1,216.58.

But instead:

- RATE = .08/12

- NPER = 60

- PMT = $20.28

- PV = $1,000.00

Then FV comes out as:   -$2,979.69

This doesn't make sense.

If my spreadsheet isn't broke, then my understanding of PMT and FV calculations is broke!