On July 15, 1988, White, a sole proprietor, was involuntarily petitioned into bankruptcy under the liquidation provisions of the Bankruptcy Code. White’s nonexempt property has been converted to $13,000 cash, which is available to satisfy the following claims:

Unsecured claim for 1986 state income tax $10,000 Fee owed to Best & Co., CPAs, for services rendered from April 1, 1988, through June 30, 1988

$6,000 Unsecured claim by Stieb for wages earned as an employee of White during March 1988

$3,000 There are no other claims.

What is the maximum amount that will be distributed for the payment of the 1986 state income tax?

a. $4,000

b. $5,000

c. $7,000

d. $10,000 AppendixLO1