Question: Koch traded machine 1 for machine 2 when the fair market value of both machines was $50,000. Koch originally purchased machine 1 for $76,200 and

Koch traded machine 1 for machine 2 when the fair market value of both machines was $50,000. Koch originally purchased machine 1 for $76,200 and machine 1's adjusted basis was $40,600 at the time of the exchange. Machine 2's seller purchased it for $64,400 and machine 2's adjusted basis was $55,600 at the time of the exchange. What is Koch's adjusted basis in machine 2 after the exchange?

Multiple Choice

$40,600.
$50,000.
$55,600.
$76,200.
None of the choices are correct.

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