Koch Traded Machine 1 for Machine 2when the Fair Market

Multiple Choice

Koch traded Machine 1 for Machine 2when the fair market value of both machines was $50,000. Koch originally purchased Machine 1 for $75,000, and Machine 1's adjusted basis was $40,000 at the time of the exchange. Machine 2's seller purchased it for $65,000 and Machine 2's adjusted basis was $55,000 at the time of the exchange. What is Koch's adjusted basis in Machine 2 after the exchange?

A) $40,000.
B) $50,000.
C) $55,000.
D) $75,000.
E) None of the choices are correct.