Jack owns an office building in San Francisco with a FMV of $2,300,000 and AB of $500,000. This year on January 1, he transfers his office building to a qualified intermediary while he looked for a qualified like-kind exchange property. On February 15, he identifies Jill’s office building in Palo Alto that has a FMV of $2,300,000 and AB of $500,000. On July 2, the properties are exchanged through the qualified intermediary.

Compute Jack and Jill’s realization and recognition of gains and the basis in the like-kind property each receives from the other.