Question - Tyler borrowed $15,000 to purchase a machine. He later borrowed $3,000 using the machine as collateral. Both notes are nonrecourse. Ten years later, the machine has an adjusted basis of zero and two outstanding note balances of $5,500 and $900. Tyler sells the machine subject to the two liabilities for $1,200. What is his realized gain or loss?
a. $0.
b. $1,200.
c. $6,400.
d. $7,600.
e. None of the above.