Johnson Inc

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.
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 the choices are correct.