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

question 102

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. $$\begin{array} { l r r } & \text { Johnson } & \text { CdK } \\\text { FMV } & \$ 900,000 & \$ 675,000 \\\text { Adjusted tax basis } & \mathbf { 5 9 3 , 0 0 0 } & \mathbf { 4 6 2 , 0 0 0 } \\\text { Mortgage } & \mathbf { 2 0 0 , 0 0 0 } & - 0 -\end{array}$$ 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 the above

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