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

question 14

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. $\begin{array}{lcr} & \text { Johnson } & \text { C\&K } \\\text { FMV } & \$ 900,000 & \$ \quad 675,000 \\\text { Adjusted tax basis } & 593,000 & 462,000 \\\text { Mortgage } & 200,000 & -0-\end{array}$ Pursuant to the exchange, C&K paid $25,000 cash to Johnson and assumed the mortgage on the Johnson property. Compute C&K's gain recognized on the exchange and its tax basis in the property received from Johnson.

• A) $200,000 gain recognized; $662,000 basis in Johnson property.
• B) No gain recognized; $462,000 basis in Johnson property.
• C) No gain recognized; $487,000 basis in Johnson property.
• D) None of these choices are correct.

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