Johnson Inc Pursuant to the Exchange, C&K Paid $25,000 Cash to Johnson

question 89

Multiple Choice

Johnson Inc. and C&K Company entered into an exchange of real property. Here is the information for the properties to be exchanged. $\begin{array}{lrrr}&\text { Johnson}&\text { C} \&\text {K} \\\text { FMV } & \$ 900,000 & \$ 675,000 \\\text { Adjusted tax basis } & 593,000 & 462,000 \\\text { Mortgage } & 200,000 & -0-0-1\end{array}$ Pursuant to the exchange, C&K paid $25,000 cash to Johnson and assumed the mortgage on the Johnson property. Compute Johnson's gain recognized on the exchange and its tax basis in the property received from C&K.

• A) $25,000 gain recognized; $593,000 basis in C&K property.
• B) $25,000 gain recognized; $793,000 basis in C&K property.
• C) $225,000 gain recognized; $593,000 basis in C&K property.
• D) None of these choices are correct.

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