A $100,000 increase in partnership liabilities is treated in which of the following ways?

A. Increases each partner's basis in the partnership by $100,000.

B. Increases the partners' bases only if the liability is nonrecourse.

C. Increases each partner's basis in proportion to their ownership.

D. Does not change any pa ner's basis in the pa nership regardless of whether the liabilities are recourse or nonrecourse.

Molloy contributed $40,000 in cash in exchange for a one-third interest in the RST Partnership. In the first year of partnership operations, RST had taxable income of $60,000. In addition, Molloy received a $5,000 distribution of cash and, at the end of the partnership year, Molloy had a one-third share in the $18,000 of partnership recourse liabilities. What was Molloy's basis in RST at year end?

A. $55,000

B. $61,000

C. $71,000

D. $101,000