Question

At the beginning of the year, Heather's tax basis capital account balance in the HEP Partnership was $85,000. During the tax year, Heather contributed property with a basis of $6,000 and a fair market value of $10,000. Her share of the partnership's ordinary income and separately stated income and deduction items was $40,000. At the end of the year, the partnership distributed $15,000 of cash to Heather. In addition, the partnership allocated $12,000 of recourse debt and $10,000 of nonrecourse debt to Heather. What is Heather's ending capital account balance determined using the tax basis method

Answer 1

$116,000

Step-by-step explanation:

Heather’s beginning capital account balance of $85,000

Add basis of the property contributed $6,000

Add Share of partnership income $40,000

Less Partnership distributed ($15,000)

Ending capital account balance $116,000