Mary received a liquidating distribution from ABC Corporation as part of the complete liquidation of ABC Corporation. Mary's basis for her ABC Corporation stock was $10,000. In exchange for her stock, Mary received a payment of $15,000 and real property that had an adjusted basis to ABC Corporation of $10,000, a fair market value of $25,000, and that was encumbered by a $12,000 mortgage which Mary assumed. How much gain did Mary recognize as a result of this transaction and what is Mary's basis in the real property?

a. $3,000 gain recognized, and basis of $40,000.

b. $18,000 gain recognized, and basis of $40,000.

c. $30,000 gain recognized, and basis of $10,000.

d. $42,000 gain recognized, and basis of $25,000.

e. none of the above.

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