Gail Stream exchanged an apartment complex that she had owned for 9 years. The complex was worth $850,000 and Gails basis was $375,000. The transferee assumed a note secured by an interest in the property of $600,000. Gail received $40,000 cash and assumed liability for loans in the amount of $680,000 against the farmland worth $890,000 she received. How much is Gails gain recognized and her basis in the farmland?

Multiple Choice

• $0; $335,000

• $40,000; $455,000

• $475,000; $890,000

• $80,000; $495,000