I have to presume that when you say you "sold" House 1 and "bought" House 2 that you meant you "exchanged" House 1 and House 2 (hopefully using a qualified intermediary).
Regardless, your total basis would be C, but do not forget that you have 16 years worth of accumulated depreciation that does not simply disappear.
In sum, you have $115,000 in exchanged basis and $62,000 in excess basis (and note that land is not depreciable so that needs to be subtracted out of the calculation).
