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 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