Partners X and Y form an equal 50/50 partnership. Partner X contributes property having a fair market value of $40,000 and a basis of $20,000 to the partnership. Partner Y contributes $40,000 in cash. The partnership then borrows $40,000 on a nonrecourse basis to purchase a tract of land. What is each partners basis in the partnership?

A) Partner X has a basis equal to $40,000 and Partner Y has a basis equal to $60,000.

B) Partner X has a basis equal to $20,000 and Partner Y has a basis equal to $40,000.

C) Both partners have a basis equal to $40,000, which is the fair value of property and money that each contributed to the partnership.

D) Both partners have a basis equal to $60,000, equal to the fair value of property and money that they each contributed to the partnership plus their share of nonrecourse debt.