Lucy Transfers Equipment (Basis of $25,000 and Fair Market Value

Lucy transfers equipment (basis of $25,000 and fair market value of $120,000) to White Corporation. In return, Lucy receives 80% of White Corporation's stock (worth $70,000) and an automobile (fair market value of $15,000) . In addition, there is an outstanding mortgage of $35,000 (taken out 5 years ago) on the equipment, which White Corporation assumes. With respect to this transaction:

A) Lucy's recognized gain is $25,000.
B) Lucy's recognized gain is $10,000.
C) Lucy has no recognized gain.
D) White Corporation's basis in the equipment is $25,000.
E) None of the above.