Paulo is an employee of Scarlet Inc. Scarlet sells property to Paulo that has a fair market value of $125,000 for $100,000 cash. Which of the following statements is correct? Paulo will recognize compensation income of $25,000 and have a basis in the property of $100,000. Paulo will not recognize any compensation income and have a basis in the property of $100,000. Paulo will recognize compensation income of $25,000 and have a basis in the property of $125,000. Paulo will not recognize any compensation income and have a basis in the property of $125,000