Eric exchanged equipment used in his land-clearing business with Geoff for upgraded equipment. Eric exchanged the equipment with a $75,000 FMV and $45,000 basis along with $15,000 cash. Geoffs basis in his equipment is $60,000, and the FMV is $90,000. Which of the following statements is correct?

a. Geoff must recognize a gain of $15,000 on the exchange.

b. Geoff must recognize a gain of $5,000 on the exchange.

c. Eric must recognize a gain of $15,000 on the exchange.

d. Neither Eric nor Geoff must recognize a gain.