Question - On October 1, Toby exchanged an apartment building (adjusted basis of $475,000 and subject to a mortgage of $225,000) for another apartment building owned by Eddie (fair market value of $750,000 and subject to a mortgage of $225,000). The property transfers were made subject to the outstanding mortgages. What amount of gain should Toby recognize?
a. $0.
b. $50,000.
c. $225,000.
d. $275,000.
e. None of the above.