Choice "d" is correct. Molloy's (adjusted) basis in the RST partnership includes its original cost ($40,000) plus its share of the partnership's taxable income ($60,000 x 1/3 = $20,000). The basis is reduced by cash distributions ($5,000) and increased by its share of the partnership's recourse liabilities (1/3 x $18,000 = $6,000). The total is $61,000.

Choice "a" is incorrect. The $55,000 is the $61,000 ignoring Molloy's share of the partnership's liabilities. However, the partnership's recourse liabilities cannot be ignored.

Choice "b" is incorrect. The $71,000 is the $61,000 with the $5,000 cash distribution increasing, as opposed to reducing, the basis. However, the distribution reduces the basis.

Choice "c" is incorrect. The $101,000 is the $61,000 with the full amount ($60,000), instead of Molloy's share ($20,000), of the partnership's taxable income added. However, only Molloy's share should be added to the basis.