1. Redoubt LLC exchanges an office building used in its business for a rental house owned by Dave. Redoubt originally purchased the building for $80,000 and it has an adjusted basis of $53,000 at the time of the exchange. In addition, the building is subject to a mortgage of $10,000, which is assumed by Dave. The rental house has a fair market value of $62,000. Redoubt also received $7,000 of cash in the transaction.

a. What is Redoubt's gain or loss realized on the exchange?

b. What is Redoubt's gain or loss recognized on the exchange?

c. What is Redoubt's basis in the rental house?