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

question 119

Multiple Choice

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?

• A) $116,000
• B) $120,000
• C) $126,000
• D) $128,000
• E) $138,000

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Definitions:

Anemic

A condition characterized by a deficiency of red blood cells or hemoglobin in the blood, leading to fatigue and weakness.

Tachypnea

An abnormally rapid breathing rate, which can be a symptom of various medical conditions or responses to stress.

Eupnea

Normal, unlabored breathing often associated with a state of rest.

Anxious Patient

A patient experiencing anxiety or nervousness, often requiring special considerations in medical settings.