e. Documentation Guidelines for Borrowers-Self Employed (continued)

Subject and Reference

Documentation Classification

Documentation Guidelines and Reductions for Refer

Additional Documentation Reductions for Accept/Approve

Business tax returns for self-employed borrowers (section 2 of this chapter)

Provide 1 of the following, with all line items captured:

·   Signed copies of business tax returns for the most recent 2 year period

·   Business income information obtained from the IRS via 1 of the following forms:

-   Form 8821 (or an alternate form acceptable to the IRS that collects comparable information)

-   Form 4506 (or an alternate form acceptable to the IRS that collects comparable information)

No business tax returns are required if all of the following conditions are met:

·   Borrower proves ownership of the business for at least the past 5 years.

·   Individual tax returns reflect consistent income for the past 2 years.

·   Funds for down payment or closing costs are not from the business.