3. M and H each contributed $40,000 to the MH Partnership. The partnership purchased office furniture for $80,000, using $20,000 cash and a recourse note payable of $60,000. M and H split partnership losses 60/40. Upon liquidation of MH, partners with deficit capital accounts must contribute cash in an amount equal to the deficit. The books of MH reflect the following:

Basis FMV

Cash $20,000 $20,000

Office furniture $80,000 $80,000

$100,000 $100,000

Recourse note $60,000 $60,000

M, capital $20,000 $20,000

H, capital $20,000 $20,000

$100,000 $100,000

Determine Ms and Hs outside basis immediately after the purchase of the office equipment.