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***Nonrecourse loan*** In the XY Partnership, X is the general partner with a 20% interest and Y is the limited partner with an 80% interest.

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***Nonrecourse loan***

In the XY Partnership, X is the general partner with a 20% interest and Y is the limited partner with an 80% interest. How is partner Y's basis affected if Y guarantees a partnership nonrecourse loan of $50,000 to a bank? (Assume that no waivers or additional contribution requirements exist.) A. Y gets a $10,000 increase in basis. B. Y gets a $40,000 increase in basis. C. Y gets a $50,000 increase in basis. D. Y gets no increase in basis

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