Effective Tax Return and Cash Flow Analysis

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Attend this proactive webinar and gain a better understanding of how tax return analysis can be used to determine an individual and company’s cash flow position. With this knowledge, the CPA will be able to help their clients improve their cash flow position, obtain financing, and/or better manage their ongoing business operation.

The first part of the webinar will concentrate on personal tax return analysis (for the business owner) including reviewing the “true” cash flow derived from the 1040 federal tax return (based on the various schedules and K-1 forms).

The second part will focus on the analysis of various business tax returns including the partnership (LLC), S corporation, and C corporation structure, analyzing business federal tax returns and prepare “cash flows” for these entities, and creating a “global” or combined cash flow analysis (personal & business).

The remainder of the webinar will cover the following “advanced” tax topics related to business clients and their “cash flows”:

  • Corporate Tax Issues including Business Structure, Section 179 Depreciation, and Bonus Depreciation
  • Investments including Capital Gain/Loss Issues and Passive Activities
  • Real Estate Issues including Rentals and Home Offices
  • Employer Provided Benefits including “Qualified Retirement Plans” and Health Savings Accounts (HSAs)
  • Retirement Planning Strategies including “Defined Benefit” Plans
  • Estate Planning Issues
  • Year-End Tax Strategies
  • Changes to the Tax Code that impact Business Owners
Your Benefits For Attending
  • Gain a better understanding of tax return analysis to determine cash flow positions for individuals and businesses.
  • Learn how to help clients improve their cash flow position, obtain financing, and manage business operations effectively.
  • Understand advanced tax topics that impact business clients, including tax strategies, investments, real estate issues, and retirement planning.
Designed For

CPAs, CFO/controllers, financial managers, auditors, financial analysts and practitioners who provide accounting, tax or consulting services to businesses.

  1. Introduction
  2. Effective Tax Return and Cash Flow Analysis 00:03:29
  3. Personal Cash Flow Analysis 00:05:38
  4. Personal Tax Flow Analysis 00:20:45
  5. Business Cash Flow Analysis 00:43:30
  6. Business Tax Return Analysis 00:45:40
  7. Global Cash Flow 01:03:36
  8. Business Tax Issues 01:04:06
  9. Depreciation Strategies and the Tax Code 01:06:13
  10. Capital Gain/Loss Issues and Passive Activities 01:06:28
  11. Real Estate Tax Issues - Personal Residence 01:07:57
  12. Real Estate Tax Issues - Personal Residence  Cont’d 01:08:46
  13. Real Estate Tax Issues - Rental/Principal Residence Strategy 01:08:57
  14. Real Estate Tax Issues - Vacation Homes & Home Offices 01:109:57
  15. Real Estate Tax Issues - Rental Investments 01:11:21
  16. Real Estate Tax Issues - 1031 Tax-Free Exchanges 01:12:45
  17. Employer-Provided Benefits: Qualified Retirement Plans and HSAs - Qualified Retirement Plan 01:13:57
  18. Employer-Provided Benefits: Qualified Retirement Plans and HSAs- Health Savings Account 01:14:16
  19. Retirement Planning - Tax Issues - Types of Plans 01:16:07
  20. Retirement Planning - Tax Issues - Defined Benefit Plans 01:16:37
  21. Estate Planning Tax Issues 01:18:59
  22. Estate Planning Tax Issues Cont’d 01:21:15
  23. Year-End Tax Strategies 01:23:17
  24. Tax Updates 01:24:10
  25. Tax Cuts and Jobs Act 01:25:04
  26. Consolidated Appropriations Act, 2020 01:26:02
  27. The SECURE Act 01:26:18
  28. C.A.R.E.S Act 01:27:33
  29. Consolidated Appropriations Act, 2021 01:27:47
  30. America Rescue Plan (ARP) Act 01:28:14
  31. Infrastructure and Jobs Act 01:28:26
  32. The Inflation Reduction Act of 2022 01:28:32
  33. 2025 Tax Rates 01:29:41
  34. Change In Personal Amounts 01:29:43
  35. Capital Gains 001:29:50
  36. Section 179 Expense 01:30:14
  37. Bonus Depreciation Deduction 01:30:17
  38. Alternative Minimum Rax 01:30:19
  39. Net Operating Loss (NOL) 01:30:22
  40. Net Investment Income 01:30:51
  41. Retirement Plan 01:30:56
  42. Health Savings Account (HSA) 01:32:07
  43. Changes In Estate & Gift Tax 01:32:27
  44. Presentation Slides 01:39:59

  • David L. Osburn, MBA

    David L. Osburn, MBA

    David is the founder and managing member of David L. Osburn & Associates LLC, a Las Vegas-based business training and contract CFO firm that provides seminar/keynote speeches for various groups including CPAs, bankers, attorneys, credit union employees, credit managers, trade groups, and busines [...]

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IRS Credit

Preparer Tax Identification Number
  • 401(k) 01:14:09
  • Amortization 00:06:30, 00:07:46, 00:35:31, 00:42:47, 00:46:50
  • Bonus Depreciation 01:06:26, 01:30:17
  • C.A.R.E.S Act 01:27:33
  • Capital Gain 00:04:09, 00:08:33, 00:39:38, 01:29:59
  • Capital Losses 00:04:09, 00:08:33
  • Cash Flow (CF) 00:05:41, 00:10:08, 00;19:14, 00:23:58, 00:31:00, 00:43:32, 00:52:01, 01:00:27, 01:37:15
  • Cash Flow Analysis 00:03:39, 00:06:09
  • C Corporation 00:44:19, 01:00:23, 01:04:35
  • Debt Coverage Ratio (DCR) 00:45:12
  • Depreciation 00:06:29, 00:07:46, 00:08:19, 00:35:27, 00:40:53, 00:42:00
  • Dividends 00:06:16
  • Exempt 00:22:26, 01:08:43
  • Expenditure 00:07:49, 00:52:43
  • Expense 00:06:28, , 00:35:39
  • Fixed Asset 00:08:20
  • Form 1040 00:20:50, 00:22:08
  • Form 1120 01:00:16
  • Form 1120-S 00:57:15
  • Form 4562 00:52:14, 00:53:03
  • Form W-2 00:22:14
  • Global Cash Flow 00:03:49, 01:03:38
  • Health Savings Account (HSA) 01:14:19, 01:32:07
  • Individual Retirement Account (IRA) 001:16:12, 01:21:19
  • Inflation Reduction Act of 2022 01:28:32
  • Intangible Assets 00:08:25
  • Interest 06:16, 00:06:21, 00:06:57, 00:30:52
  • Like-Kind Exchange 01:12:58
  • Limited Liability Company (LLC) 00:07:05, 00:32:27, 01:02:43, 01:04:36
  • MACRS - Modified Accelerated Cost Recovery System 00:52:19
  • Net Operating Loss (NOL) 01:30:22
  • Schedule A 00:08:36, 00:29:47
  • Schedule B 00:06:20, 00:30:36
  • Schedule C 00:06:24, 00:06:44, 00:34:58, 0042:58
  • Schedule D 00:36:18
  • Schedule E 00:40:13
  • Schedule F 00:41:38
  • S Corporation 00:08:47, 01:02:44, 01:04:35
  • Sole Proprietor 00:07:04
  • Tax Cuts and Jobs Act 01:19:06, 01:25:05
  • Tax Return Analysis 01:
  • Wage 00:12:42

401(k): In the United States, a 401(k) plan is the tax-qualified, defined-contribution pension account defined in subsection 401(k) of the Internal Revenue Code.

Amortization: An accounting term that refers to the process of allocating the cost of an intangible asset over a period of time. It also refers to the repayment of loan principal over time. (investinganswers.com)

Bonus Depreciation: A valuable tax-saving tool for businesses. It allows your business to take an immediate first-year deduction on the purchase of eligible business property, in addition to other depreciation. (www.thebalancesmb.com)

C Corporation: A C corporation, under United States federal income tax law, refers to any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately. Most major companies are treated as C corporations for U.S. federal income tax purposes.

C.A.R.E.S Act: The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, is a law intended to address the economic fallout of the COVID-19 pandemic in the United States.

Capital Gain: Capital gain is an economic concept defined as the profit earned on the sale of an asset that has increased in value over the holding period. An asset may include tangible property, a car, a business, or intangible property such as shares.

Capital Losses: A capital loss occurs when there is a “sale or exchange” of a “capital asset” at a loss.

Cash Flow (CF): The revenue or expense expected to be generated through business activities (sales, manufacturing, etc.) over a period of time.

Cash Flow Analysis: Cash flow analysis is a financial tool that assesses a company's cash inflows and outflows over a specific period of time. It's a key metric for businesses to understand their financial health and liquidity, and to identify areas for improvement.

Certificate of Deposit (CD): A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year, or five years, and in exchange, the issuing bank pays interest. When you cash in or redeem your CD, you receive the money you originally invested plus any interest.

Debt Coverage Ratio (DCR): The debt service coverage ratio, also known as "debt coverage ratio", is the ratio of operating income available to debt servicing for interest, principal and lease payments. It is a popular benchmark used in the measurement of an entity's ability to produce enough cash to cover its debt payments.

Depreciation: A reduction in the value of an asset with the passage of time, due in particular to wear and tear.

Dividends: A dividend is a payment made by a corporation to its shareholders, usually as a distribution of profits. When a corporation earns a profit or surplus, the corporation is able to re-invest the profit in the business and pay a proportion of the profit as a dividend to shareholders.

Exempt : Exempt employee is a term that refers to a category of employees set out in the Fair Labor Standards Act. They do not receive overtime pay, nor do they qualify for the minimum wage

Expenditure: An expenditure is money spent on something. Expenditure is often used when people are talking about budgets.

Expense: Offset (an item of expenditure) as an expense against taxable income.

Fixed Assets: Assets that are purchased for long-term use and are not likely to be converted quickly into cash, such as land, buildings, and equipment.

Form 1040: Form 1040 is used by U.S. taxpayers to file an annual income tax return. The form calculates the total taxable income of the taxpayer and determines how much is to be paid or refunded by the government.

Form 1120: Form 1120 is the U.S. corporation income tax return. It is an Internal Revenue Service (IRS) document that American corporations use to report their credits, deductions, losses, gains, and income. It also helps corporations find out how much income tax they need to pay, according to the IRS.

Form 1120-S: Form 1120S is a tax document used to report the income, losses, and dividends of S corporation shareholders. A corporation or other entity must file Form 1120S if (a) it elected to be an S corporation by filing Form 2553, (b) the IRS accepted the election, and (c) the election remains in effect.

Form 4562: Depreciation and Amortization is an Internal Revenue Service (IRS) tax form used to claim deductions for the depreciation or amortization of a piece of property.

Global Cash Flow: Global Cash Flow analysis is used by financial institutions to assess the combined cash flow of a group of people and/or entities to get a global picture of their ability to service the proposed debt. Global cash flow should include all of an owner's business and personal income/salary, debt and other financial obligations, and liquidity. On the business side, cash flow is fairly straightforward: net income. + depreciation/amortization and interest. – dividends/distributions.

Health Savings Account (HSA): A savings account used in conjunction with a high-deductible health insurance policy that allows users to save money tax-free against medical expenses.

Individual Retirement Account (IRA): Is a form of pension provided by many financial institutions that provides tax advantages for retirement savings.

Inflation Reduction Act Of 2022: The Inflation Reduction Act will protect Medicare recipients from catastrophic drug costs by phasing in a cap for out-of-pocket costs and establishing a$35 cap for a month's supply of insulin. And, as an historic win, Medicare will be able to negotiate prices for high-cost drugs for the first time ever.

Intangible Assets: An asset that is not physical in nature. Goodwill, brand recognition and intellectual property, such as patents, trademarks and copyrights, are all intangible assets. (www.investopedia.com)

Interest : Interest is the charge for the privilege of borrowing money, typically expressed as annual percentage rate (APR). Interest can also refer to the amount of ownership a stockholder has in a company, usually expressed as a percentage.

Like-Kind Exchange: A like-kind exchange under United States tax law, also known as a 1031 exchange, is a transaction or series of transactions that allows for the disposal of an asset and the acquisition of another replacement asset without generating a current tax liability from the sale of the first asset.

Limited Liability Company (LLC): An LLC is a corporate structure where members cannot be held accountable for the company’s debts or liabilities. This can shield business owners from losing their entire life savings if, for example, someone were to sue the company. Can be a single member (much like a sole proprietor) or a multi-member. It shares certain traits of both corporations as well as partnerships or sole proprietorships. It is not a corporation.

MACRS - Modified Accelerated Cost Recovery System: The Modified Accelerated Cost Recovery System is the current tax depreciation system in the United States. Under this system, the capitalized cost of tangible property is recovered over a specified life by annual deductions for depreciation. The lives are specified broadly in the Internal Revenue Code.

Net Operating Loss (NOL): Generally, a net operating loss (NOL) is an excess of deductions (for expenses from the operation of a business) over income from the operation of a business. For individuals, an NOL may also be attributable to casualty losses.

S Corporation: An S corporation, for United States federal income tax, is a closely held corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. In general, S corporations do not pay any income taxes.

Schedule A: Schedule A (Form 990) is used by an organization that files Form 990, Return of Organization Exempt From Income Tax, or Form 990-EZ, Short Form Return of Organization Exempt From Income Tax, to provide the required information about public charity status and public support.

Schedule B: The IRS uses Schedule B to determine if you've deposited your federal employment tax liabilities on time. If you're a semiweekly schedule depositor and you don't properly complete and file your Schedule B with Form 941, the IRS may propose an “averaged” FTD penalty

Schedule C: Use Schedule C (Form 1040) to report income or loss from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies as a business if: Your primary purpose for engaging in the activity is for income or profit.

Schedule D: Use Schedule D (Form 1040) to report the following: The sale or exchange of a capital asset not reported on another form or schedule. Gains from involuntary conversions (other than from casualty or theft) of capital assets not held for business or profit.

Schedule E: Schedule E is used to report income and losses from rental property, and income from trusts, estates, partnerships, and S-corporations. If you're receiving income from any of the pass-through activities, you should receive a Schedule K-1 from the entity.

Schedule F : Schedule F (Form 990) is used by an organization that files Form 990, Return of Organization Exempt From Income Tax, to provide information on its activities conducted outside the United States by the organization at any time during the tax year.

Sole Proprietor: A business that legally has no separate existence from its owner. The sole proprietorship is the simplest business form under which one can operate a business. The sole proprietorship is not a legal entity. It simply refers to a person who owns the business and is personally responsible for its debts.

Tax Cuts and Jobs Act: The Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018, Pub.L. 115–97, is a congressional revenue act of the United States originally introduced in Congress as the Tax Cuts and Jobs Act, that amended the Internal Revenue Code of 1986.

Wage: A fixed regular payment, typically paid on a daily or weekly basis, made by an employer to an employee, especially to a manual or unskilled worker.

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Frequently Asked Questions

Tax return analysis is a powerful technique for uncovering a taxpayer's actual cash flow by reconstructing true economic income from IRS filings, which often differ significantly from reported net income due to non-cash items, timing differences, and tax-minimizing strategies. For individual business owners, the personal Form 1040 serves as a comprehensive financial snapshot: Schedule C captures sole proprietorship income and expenses, Schedule E reports partnership, S corporation, and rental income or losses, and Schedule D reflects capital gains activity. True cash flow is derived by starting with net income and adding back non-cash charges such as depreciation and amortization, then adjusting for owner draws, guaranteed payments, debt principal payments, and distributions. K-1 forms from partnerships and S corporations are particularly important sources of information because they reveal pass-through income, self-employment income, and the distinction between income actually distributed and income recognized but not received. By working through these schedules systematically, CPAs and financial advisors can develop a comprehensive picture of cash available for debt service, investment, or operational needs—a perspective that reported income figures alone may obscure.
Global cash flow analysis is the comprehensive assessment of combined personal and business cash flows for a business owner or group of related entities, providing a unified picture of total economic capacity to service debt and meet financial obligations. Unlike analyzing personal or business cash flows in isolation—which can present a misleadingly narrow picture—global cash flow captures the full financial reality: the business owner's total income from all sources, all personal and business debt obligations, owner draws and distributions, and the interplay between personal and entity-level finances. This analysis is particularly important for CPAs and financial advisors assisting business owner clients with financing, because lenders increasingly require global cash flow analysis for closely held business loan applications. The process involves aggregating cash flows from all entities in which the owner has a significant interest—partnerships, S corporations, C corporations, and sole proprietorships—alongside personal income sources such as W-2 wages, investment income, and rental properties. Each entity's cash flow is normalized to reflect actual economic income rather than tax-minimized reported income, and owner-level obligations including personal debt service are netted out to arrive at global net cash flow available for additional debt service or investment.
Business structure profoundly affects how income, distributions, and cash flow are reported on tax returns, requiring analysts to understand the distinctive features of each entity type. Sole proprietorships (Schedule C) report business income and expenses directly on the owner's 1040, making cash flow analysis more straightforward but requiring careful identification of personal expenses mixed with business deductions. Partnerships and LLCs (Form 1065, Schedule K-1) pass through income, losses, and deductions to partners proportionate to their ownership interests; analysts must distinguish between guaranteed payments (compensation-like payments reported separately) and distributive share income, and recognize that reported income may differ significantly from actual cash distributions. S corporations (Form 1120-S, Schedule K-1) similarly pass through income while paying shareholder-employees W-2 wages, creating a two-part income picture that must be combined for comprehensive analysis. C corporations (Form 1120) retain income at the entity level; only actual distributions (dividends) or W-2 wages paid to owner-employees flow to personal returns, making analysis of true economic benefit more complex. Understanding how depreciation strategies, including Section 179 and bonus depreciation elections, affect reported income versus actual cash position is essential for each structure, as significant depreciation deductions can create low or negative taxable income while actual cash generation remains strong.
Several advanced tax strategies create significant divergences between reported taxable income and actual economic cash flow that analysts must identify and adjust for. Section 179 expensing and bonus depreciation allow businesses to immediately deduct the full cost of qualifying assets in the year of purchase, creating large current-year deductions that reduce taxable income well below actual cash generation—particularly important to add back in cash flow analysis since the underlying cash was spent in prior periods or financed. Net Operating Loss (NOL) carryforwards allow current-year reported income to be reduced by losses from prior years, again understating current economic performance. Qualified retirement plan contributions—both employer contributions and defined benefit plan funding—are cash expenditures that reduce taxable income but represent actual cash outflows that must be evaluated for their impact on available cash flow. Real estate investors using passive activity rules, 1031 exchanges, and home office deductions create complex layering of tax benefits that require careful unwinding to assess true economic position. Capital gain and loss activities visible on Schedule D reflect actual realization events but may reflect installment sales reported across multiple years. Health Savings Account (HSA) contributions and employer-provided benefits also affect the picture. Understanding these strategies is essential for CPAs and financial analysts serving business clients, as tax-minimized reporting often significantly understates the client's true financial strength.
Tax return and cash flow analysis positions CPAs as proactive financial advisors rather than compliance processors, enabling them to deliver high-value strategic guidance beyond the preparation of filings. By systematically analyzing a client's tax returns to reconstruct true cash flow, CPAs can identify hidden financial strengths that lenders may undervalue due to tax-minimizing reporting—helping clients present their actual debt service capacity accurately to support financing applications. Conversely, the analysis may reveal cash flow weaknesses masked by one-time income items or asset sales, enabling earlier remediation planning. Year-end tax strategy conversations are enriched by cash flow analysis: understanding whether a client's true economic position favors accelerating deductions (through additional Section 179 elections or retirement plan contributions) or deferring income requires integrating tax projections with actual cash flow needs. Estate planning conversations benefit from clear visibility into the true economic value of business interests—which may differ substantially from taxable estate values after strategic planning. For clients seeking business financing, CPAs who can prepare global cash flow presentations that accurately reflect true debt service capacity—normalized for non-recurring items, non-cash deductions, and entity-level adjustments—provide a competitive advantage in the lending process. This analytical capability represents a high-value advisory service that deepens client relationships and differentiates the CPA's practice.