A and B form a partnership, using an LLC. Accordingly, both partners have liability limited to their investment in the partnership. The operating agreement satisfies the alternate test for economic effect and contains a QIO and minimum gain chargeback provision. The partnership agreement provides that all allocations of income and loss, other than nonrecourse deductions, are to be allocated 50/50. The agreement provides that nonrecourse deductions should be allocated 20% to A and 80% to B. At the beginning of the prior year, nonrecourse liabilities were $1 million. Basis in the building securing that liability was $800,000 at the start of the year and $400,000 at the end of the year. Assuming that the partnership's losses for the year equaled $400,000, how should this amount be allocated between A and B?

a.

$320,000 to A, $80,000 to B

b.

None of these answers is correct.

c.

$80,000 to A, $320,000 to B

d.

$200,000 to each partner.

e.

$0 to each partner.