Red Bush and Green Tree Are Equal Partners in Arbor

Red Bush and Green Tree are equal partners in Arbor Partnership. Each partner has contributed capital of $60,000 to the partnership and this is also their adjusted cost base for the partnership interest. Blue Grass will join the partnership as an equal partner. Which of the following statements is correct?

A) Blue Grass will pay $20,000 directly to each of the original partners and the adjusted cost base of the partnership interest of Red Bush and Green Tree will decrease by $20,000 each.
B) Blue Grass will pay $30,000 directly to each of the original partners and the adjusted cost base of the partnership interest of Red Bush and Green Tree will decrease by $30,000 each.
C) Blue Grass will pay $40,000 directly to the partnership and the adjusted cost base of the partnership interest of Red Bush and Green Tree will increase by $20,000 each.
D) Blue Grass will pay $40,000 directly to the partnership and the adjusted cost base of the partnership interest of Red Bush and Green Tree will decrease by $20,000 each.