On January 1, Helmut Pays $2,000 for a 10% Capital

Multiple Choice

On January 1, Helmut pays $2,000 for a 10% capital, profits, and loss interest in a partnership, which has recourse liabilities of $20,000. The partners share economic risk of loss from recourse liabilities in the same way they share partnership losses. In the same year, the partnership incurs losses of $6,000 and the recourse liabilities increase by $5,000. Helmut and the partnership use a calendar tax year-end. Helmut's basis at year-end is

A) $1,500.
B) $2,000.
C) $3,500.
D) $3,900.