Nanci purchases all of the assets of Michael's Security Service for $200,000. The assets are as follows: Assets of Michael's Security Service Asset Adjusted Basis Fair Market Value Inventory $25,000 $50,000 Equipment 60,000 40,000 Supplies 20,000 20,000 Building 80,000 95,000 Land 10,000 20,000 Total $195,000 $225,000 What is Nanci's basis in the equipment? Group of answer choices

A.$60,000 B. $17,776 C. $40,000 D. $61,538 E. $35,556