Joe owns a farm with a basis of $250,000 and fair market value of $550,000. Willy owns an apartment building with a fair market value of $100,000 and a basis of $300,000. They exchange the properties. In addition, Willy gives Joe cash of $450,000.

a) What are Joe's and Willy's realized gain and losses on the transaction?

b) What amounts of gain or losses do they recognize on the transaction?

c) What is the basis of the property received bu Joe? Why?