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.