Q: So would a lender want to make an adjustment to EBITDA for a repayment of a shareholder loan as detailed on line 16E?
A: This is a different situation from a shareholder repaying a loan from the company to him or her. In this instance, the shareholder has loaned money to the company, which is not considered a revenue event impacting EBITDA. Therefore, the company's repayment of the loan from the shareholder – the amount at Line 16E – does not impact EBITDA. Both the loan from the shareholder to the company and the company's repayment represent Related Party Transactions that do not impact EBITDA and the Income Statement nor the operating section of the UCA cash flow statement.
The repayment impacts the Balance Sheet, which is ignored in cash flow proxy calculations – both traditional cash flow and EBITDA – which only look at the Income Statement. The adjustment would be made in a complete UCA cash flow statement in the Related Party Transactions section.
Q: There are only 2 areas in which the recipient of the K-1 can receive cash, distributions, and guaranteed payments which are taxable. Correct?
A: Yes, just two amounts on Schedule K-1 (Form 1065) are cash payments - the amount reported in Box 4c and the amount reported in Box 19A. 19A is a cash amount. 19B and 19C are non cash distributions, such as the partner's share of a gain on sale of real property.
Course overview: Understanding Schedules K-1