Michelle and Jacob formed the MJ Partnership. Michelle contributed $20,000 of cash in exchange for her 50% interest in the partnership capital and profits. During the first year of partnership operations, the following events occurred: the partnership had net taxable income of $10,000; Michelle received a distribution of $8,000 cash from the partnership; and she had a 50% share in the $16,000 of partnership recourse liabilities on the last day of the partnership year. Michelle's adjusted basis for her partnership interest at year end is:
a. $17,000.
b. $20,000.
c. $25,000.
d. $33,000.
e. $38,000.