Koch traded Machine 1 for Machine 2 when the fair market value of both machines was $49,450. Koch originally purchased Machine 1 for $76,100, and Machine 1's adjusted basis was $40,550 at the time of the exchange. Machine 2's seller purchased it for $64,450 and Machine 2's adjusted basis was $55,550 at the time of the exchange. What is Koch's adjusted basis in machine 2 after the exchange?

Multiple Choice

• $76,100

None of the choices are correct.

$55,550

$49,450

$40,550