A new partner, Bill, contributes cash and assumes a share of partnership liabilities. Brendas capital, profits, and loss interest in the new partnership is reduces by 10% due to admission of Bill. The Sec. 751 rules do not apply. Partnerships liabilities at the time Bill is admitted are $200,000, and all of the liabilities are recourse debts for which the partners share economic risk of loss in the same way they share partnership profits. Brendas basis in the partnership interest prior to Bills admission is $10,000

Due to the admission of Bill, partner Brenda has:

a. No recognized gain or loss and a partnership interest basis of $10,000

b. A recognized gain of $10,000 and a partnership interest basis of zero

c. A recognized gain of $5,000 and a partnership interest basis of zero

d. A recognized gain of $5,000 and a partnership interest basis of $5,000