Landlord Jones exchanges a rental property with a basis of $250,000 and a value of $400,000 for a different rental property with a value of $350,000 from landlord Davis. Davis' basis in her rental property is $225,000. Davis also gives Jones $50,000 in cash.

For Davis, which of the following statements is true?

Davis has a realized and recognized gain of $175,000.

Davis has a realized gain of $125,000 but no recognized gain.

Davis has a realized gain of $125,000 and a recognized gain of $125,000.

Davis has a realized gain of $50,000 and no recognized gain.