A client owns an apartment building with a fair market value of $250,000, an adjusted basis of $175,000, and a mortgage of $150,000. The client exchanges the building and $40,000 cash for a different apartment that has a fair market value of $220,000. The client assumes the $80,000 mortgage on the building to be acquired.

Which tax amount will the client realize as a result of the exchange?

The answer is $75,000 gain, but I am unsure of the calculation to arrive at this answer.