Pedro Borrowed $250,000 to Purchase a Machine Costing $300,000

Pedro borrowed $250,000 to purchase a machine costing $300,000.He later borrowed an additional $25,000 using the machine as collateral.Both notes are nonrecourse.Eight years later,the machine has an adjusted basis of zero and two outstanding note balances of $145,000 and $18,000.Pedro sells the machine subject to the two liabilities for $45,000.What is his realized gain or loss?

A) $0
B) $45,000
C) $163,000
D) $208,000
E) None of these