Add-back worksheet

This is educational. It is not a quality-of-earnings opinion and not tax advice.

Seller's discretionary earnings start from profit and add back the benefits an owner took that a buyer might not. The worksheet on the calculators page does the sum, and it warns when a one-time line is large next to profit or when you mark that line as recurring:

reported profit, plus owner compensation, plus personal expenses run through the company, plus truly one-time costs, minus the wage of a replacement manager if the buyer will not do the owner's job.

A boat payment for a boat the owner uses on weekends is a candidate add-back. A "one-time" marketing spend that appears every March is not. Depreciation is an accounting add-back only if you also plan for the cash the next truck will cost.

IRS Publication 334 is a starting point for how a small business reports income. It is not a valuation standard. Your CPA should tie the worksheet to the return before a buyer sees it.