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.

Question

Quizplus · Accepted Answer

Heather's ending capital account balance is $86,000. This is calculated by adding her beginning capital account balance of $60,000 to her share of the partnership's ordinary income and separately stated income and deduction items of $26,000, and then subtracting the cash distribution of $10,000.

At the Beginning of the Year, Heather's "Tax Basis" Capital