XYZ Realty LLC owned a shopping center having an adjusted basis of $2,550,000 (the property had been owned for ten years). Underwater Realty LLC loses a major tenant, and cannot meet its monthly debt service obligation. XYZ Realty meets with the mortgagee, and both mortgagor and mortgagee agree to a reduction of principal of $400,000. At the time of the discharge, the outstanding principal balance was $1.9 million. Subsequent to the discharge, the balance of the mortgage is $1.5 million. What is XYZ new adjusted tax basis after debt reduction?

a) $1,300,000

b) $1,900,000

c) $2,150,000

d) $1,750,000

e) $2,550,000