Lily Exchanges a Building She Uses in Her Rental Business

Multiple Choice

Lily exchanges a building she uses in her rental business for a building owned by Kendall,which she will use in her rental business.The adjusted basis of Lily's building is $120,000 and the fair market value is $170,000.Which of the following statements is correct?

A) Lily's recognized gain is $50,000 and her basis for the building received is $120,000.
B) Lily's recognized gain is $50,000 and her basis for the building received is $170,000.
C) Lily's recognized gain is $0 and her basis for the building received is $120,000.
D) Lily's recognized gain is $0 and her basis for the building received is $170,000.
E) None of these is correct.