Ted King's basis for his interest in the Troy Partnership is $32,000. In complete liquidation of his interest, King receives cash of $6,000 and real property (not a Sec. 751 asset) having an FMV of $40,000. Troy's adjusted basis for this realty is $17,500. Section 736 does not apply. King's basis for this realty is

A) $17,500.

B) $20,000.

C) $26,000.

D) $40,000.