Partnership KBCD owns a building with a tax basis of $1,250,000 and a book value of $1, 800, 000. The building (which was contributed to the partnership by a partner) is encumbered by a nonrecourse mortgage of $2,000,000. The property was recently appraised at $2,500,000. What is the Code Sec. 704(c) minimum gain (if any) with respect to this property?

a. $1,250,000
b. $1,050,000
c. $750,000
d. $550,000