Johnson Inc. and C&K Company entered into an exchange of real property. Here is the information for the properties to be exchanged. Johnson C&K FMV$900,000 $675,000 Adjusted tax basis 593,000 462,000 Mortgage 200,000 -0- 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. No gain recognized; $487,000 basis in Johnson property.
B. No gain recognized; $462,000 basis in Johnson property.
C. $200,000 gain recognized; $662,000 basis in Johnson property.
D. None of the choices are correct.
Answer: D
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