Brian Bush and Charles Chex Exchange Business Machines

Brian Bush and Charles Chex exchange business machines. Brian gives Charles a machine with a basis of $3,500 (fair market value $3,000) plus $2,000 in cash. Charles gives Brian a machine with a basis of $5,000 and a fair market value of $5,000. What is Charles's recognized gain and his basis in the new machine?

A) $2,000 and $5,000
B) $500 and $3,500
C) $1,000 and $5,000
D) $0 and $3,000