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
a
RATIONALE: Heather's beginning capital account balance of $85,000 is "rolled forward" by adding the basis of the property she contributed ($6,000) and her share of partnership income ($40,000), and subtracting the distribution to her ($15,000). Liabilities are not included in the partner's capital account.
You might also like to view...
Liabilities related to assets invested in a partnership by a new partner can be transferred to the partnership
Indicate whether the statement is true or false
The marketing of products to ultimate consumers through face-to-face sales presentations either at home or the workplace is called
A. direct marketing. B. direct-response marketing. C. telemarketing. D. personal selling. E. direct selling.
Which of the following is NOT a common cause of conflict between producers and channel partners in a channel system?
A. different target customers B. different objectives C. independent operations D. lack of communication E. lack of a channel captain
Investment banks form syndicates to reduce the risk involved in selling new securities
Indicate whether the statement is true or false