In 20X5, Brad exchanged an apartment complex in Texas (purchased in 20X1; cost $600,000; adjusted basis $400,000) for an apartment complex in Florida (FMV $900,000). In 20X9, after deducting $70,000 of depreciation, Brad sells the Florida apartment complex for $980,000. Which of the following statements is true with regard to these transactions?

1. Brads 25% gain is $270,000.

2. None of the answers provided is correct.

3. Brads 25% gain is $70,000.

4. Brad has ordinary income of $14,000 on the sale.

5. Brad has ordinary income of $54,000 on the sale.