XYZ exchanged an old building for a new like-kind building. XYZ's adjusted basis in the old building was $13,000 ($30,000 initial cost - $17,000 accumulated depreciation), and its FMV was $20,000. Because the new building was worth $28,500, XYZ paid $8,500 cash in addition to the old building.

a. Compute XYZ's realized gain, and determine the amount and character of any recognized gain.

b. Compute XYZ's basis in its new building.