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 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

Babex Inc. and OMG Company entered into an exchange of real property. Here is the information for the properties to be exchanged. \[\begin{array} { l r r } & \text { Babex } & O M G \\ \text { FMV } & \$ 1,000,000 & \$ 825,000 \\ \text { Adjusted tax basis } & \mathbf { 7 6 8 , 0 0 0 } & \mathbf { 5 1 4 , 5 0 0 } \\ \text { Mortgage } & \mathbf { 1 7 5 , 0 0 0 } & - \mathbf { 0 } - \end{array}\] Pursuant to the exchange, OMG assumed the mortgage on the Babex property. Compute Babex's gain recognized on the exchange and its tax basis in the property received from OMG.

A) $175,000 gain recognized; $768,000 basis in OMG property B) No gain recognized; $768,000 basis in OMG property C) $175,000 gain recognized; $943,000 basis in OMG property D) None of the above A) $175,000 gain recognized; $768,000 basis in OMG property B) No gain recognized; $768,000 basis in OMG property C) $175,000 gain recognized; $943,000 basis in OMG property D) None of the above