Identify which of the following statements is true.

A. Any distributive share of a loss that cannot be deducted by a partner because of the Sec. 704(d) basis loss limitation is permanently lost.

B. When adjusting a partner's basis in a partnership interest, the negative basis adjustments are made prior to the positive basis adjustments.

C. Martin and Carlos formed an equal partnership to which Martin contributed $10,000 cash and Carlos contributed a building worth $10,000 with a basis of $2,000. In the first year of operation, the partnership suffered a $10,000 ordinary loss. Martin and Carlos can each deduct a $5,000 loss on their personal tax returns.

D. All of the above are false.