Ending capital account balance


At the beginning of the year, Heather's "tax basis" capital account balance in the HEP Partnership was $60,000. During the tax year, Heather contributed property with a basis of $10,000 and a fair market value of $30,000. Her share of the partnership's ordinary income and separately stated income and deduction items was $26,000. At the end of the year, the partnership distributed $10,000 of cash to Heather. Also, the partnership allocated $15,000 of recourse debt and $25,000 of nonrecourse debt to Heather. What is Heather's ending capital account balance determined using the "tax basis" method?

a. $86,000.

b. $96,000.

c. $101,000.

d. $126,000.

e. $136,000.

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Accounting Basics: Ending capital account balance
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