1. Your supervisor has asked you to research the following situation concerning Owen and Lisa Cordoncillo. Owen and Lisa are brother and sister. In May 2018, Owen and Lisa exchange land they both held separately for investment. Lisa gives up a two acre property in Texas with an adjusted basis of $2,000 and a fair market value of $6,000. In return for this property, Lisa receives from Owen a one acre property in Arkansas with a fair market value of $5,500 and cash of $500. Owens adjusted basis in the land he exchanges is $2,500. In March 2019, Owen sells the Texas land to a third party for $5,800.

Please explain and calculate the amount of Owen and Lisas gain recognition for 2018. Also determine the effect, if any, of the subsequent sale in 2019.