Sharon and Sara are equal partners in the S&S Partnership. On January 1 of the current year, each partner’s adjusted basis in S&S was $50,000 (including each partner’s $15,000 share of the partnership’s $30,000 of liabilities). During the current year, S&S repaid the beginning liabilities and borrowed $20,000 for which Sharon and Sara are equally liable. In the current year ended December 31, S&S also sustained a net operating loss of $25,000 and earned $5,000 of interest and qualified dividend income from investments. If liabilities are shared equally by the partners, on January 1 of the next year each partner’s basis in her interest in S&S is:

a. $35,000.
b. $40,000.
c. $45,000.
d. $47,500.
e. None of the above