February 28, 2012 at 3:44 pm EST #2403BDyessMember
Been a long time since I’ve been at a bank where we had to collect/report CRA data, so I’m trying to work through the cobwebs. I think the LLCs are causing the most challenges on what to report in terms of revenues.
What do you think in terms of reporting gross revenues for this scenario? All of these LLCs have same two members, who are also the owners of the company listed below.
-ABC LLC – holds real estate for the two restaurants an the yogurt shop. Tax returns show gross revenues $0 and gross rents of less than $1 million.
-DEF Inc. – one of the restaurants – revenues over $1 million
-GHI LLC – new restaurant in late 2011 (only have projections for revenues)
-JLM LLC – new yogurt shop in late 2011 (only have projections for revenues)
1. Loan to ABC LLC and GHI LLC. But, repayment is vague showing it’s coming from “restaurant.” Guarantors are DEF Inc. as well as the two individuals. Reporting revenues of over $1 million. Agree?
2. Loan to JLM LLC – Shows repayment coming from sales at this new yogurt shop (new – not yet open). Guarantors are the two individuals who are members of the LLCs and owners of the one company. The loan officer states that he didn’t specifically consider the revenues of any of the other entities, but did give value to the guarantors’ overall assets and income/cash flow which would include all entities. Report revenues as less than $1 million since it’s a new entity, or over $1 million since revenues of all of the entities were considered in terms of the guarantors? (I realize CRA rules say you don’t count guarantor revenues unless the guarantor is the parent company or subsidiary which is why I am leaning to reporting less than $1 million.)
Thank you for your input.February 29, 2012 at 10:26 pm EST #2923jholzknechtKeymaster
The best guidance on this topic comes from A Guide to CRA Data Collection and Reporting, and it is a little vague when dealing with affiliated entities such as those described in your questions. I concur with your analysis in both situations.March 1, 2012 at 10:34 pm EST #2925BDyessMember
Thank you! Yes, I’ve read and re-read the section of the reg and the Guide on this, and you are right, it’s a little vague…..has made it a bit challenging for determing GAR on a lot of our LLC relationships.
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