A major tenant moved, and Park Avenue LLC was unable to meet the monthly mortgage payment. After extensive negotiations with the lender, the mortgage was reduced by $400,000.

At that time, the FMV of the building was $3,000,000 and the basis was $2,000,000.

1. The FMV will be adjusted down by $400,000
2. The basis of the building will be reduced by $400,000
3. The new adjusted basis will be $1,600,000
4. b, and c
5. a, and c