Cabel's warehouse, which has an adjusted basis of $380,000 and a fair market value of $490,000, is condemned by and agency of the Federal governament to make way for a highway interchange. The initial condemination offer is $425,000. After substantial negotiations, the agency agrees to transfer to Cabel a surplus warehouse that he believes is worth $490,000. Cabel is a calendar year taxpayer. The condemnation and related asset transfer occur during September 2015.

a. What are the recognized gain or loss and the basis of the replacement warehouse if Cabel's objective is to recognize as much gain as possible?

b. Advise Cabel regarding what he needs to do by what date to achieve his objective.