Rita and Todd exchange real estate in a like-kind exchange. Rita’s property is subject to a $40,000 mortgage and has a basis of $75,000 (fair market value of $112,000). She receives real estate with a fair market value of $72,000 and Todd assumes the mortgage. What is her recognized gain and adjusted basis for the real estate received?
a. $0; $75,000.
b. $37,000; $72,000.
c. $37,000; $75,000.
d. $40,000; $115,000.
e. None of the above