Bob exchanges 4,000 shares of Beetle Corporation stock that he had purchased for $500,000 for 6,000 shares of Butterfly Corporation common stock with a fair market value of $900,000. What is Bob's recognized gain on the exchange and his basis in the Butterfly stock?

Recognized Gain	Basis
$400,000	$500,000

Recognized Gain	Basis
$0	$500,000

Recognized Gain	Basis
$0	$900,000

Recognized Gain	Basis
$400,000	$900,000