Sam exchanged business Machine 1 for Machine 2 when the fair market value of both machines was $50,000. Sam originally purchased Machine 1 for $75,000, and Machine 1's adjusted basis was $40,000 at the time of the exchange. The seller of Machine 2 had an adjusted basis in Machine 2 of $55,000 at the time of the exchange. What is Sam's realized gain and recognized gain on the exchange and what is his adjusted basis in Machine 2 after the exchange?

a. $10,000 realized gain, $10,000 recognized gain and $50,000 adjusted basis in machine 2. b. $15,000 realized gain, $0 recognized gain and $35,000 adjusted basis in machine 2. c. $10,000 realized gain, $0 recognized gain and $40,000 adjusted basis in machine 2. d. $15,000 realized gain, $ $15,000 recognized gain and $50,000 basis in machine 2. e. None of the other combinations are correct.