Elijah Contributes Land (Basis of $80,000; Fair Market Value of $400,000)

Elijah contributes land (basis of $80,000; fair market value of $400,000) for a 20% interest in a partnership. The land is subject to a mortgage of $50,000 which the partnership assumes. As a result of the transfer, Elijah:

A) Must recognize a gain of $40,000.
B) Has a basis in the partnership of $40,000.
C) Has a basis in the partnership of $70,000.
D) Has a basis in the partnership of $360,000.
E) None of the above.