Emma owns an apartment building on Main Street with the following facts: Main Street Building:

Original Cost $500,000

Accumulated Depreciation 250,000

Mortgage Balance 100,000

Sale Price $800,000

Selling Expense & Closing Costs 50,000

Emma will sell the Main Street apartment building as the first leg in a 1031 exchange. Using a qualified exchange accommodator, she correctly identifies within the 45-day period and subsequently closes within 180 days on the following replacement commercial building in downtown.

Downtown Commercial Building:

Purchase Price $1,000,000

Down Payment 25,000

New Mortgage 400,000

Closing Costs 75,000

Required: 1. How much gain is taxable, if any?

2. What is the basis for the Downtown Commercial Building?