Mark bought a drill for $3,500. He borrowed $3,500 to pay for the purchase. In 2020, when the drill has an adjusted basis of zero and two outstanding note balances of $2,000 and $600 Mark sells the machine for $1,000 with no remaining obligation. What is his realized gain or loss?

A. $1,600

B. $1,000

C. $2,600

D. $3,600