John owns a duplex which he has been renting to tenants for the past 13 years. He paid $400,000 to acquire the duplex and has claimed $170,000 in depreciation deductions. The remaining balance for the mortgage on the duplex is $185,000. John is tired of being in the rental property business.

Jill owns a small goat farm which she inherited from her mother. Her basis in the farm (fair market value on the date of her mothers death) is $62,000. The goat farm has no debt. Jill is tired of raising goats.

So John and Jill arrange to exchange properties. When John discovers that his property appraises for $600,000 (subject to the mortgage, which leaves an equity of $415,000) and Jill's property appraises at $390,000 (with no mortgage), John demands that Anna also pay him cash of $25,000 to equalize the exchange. Jill agrees and they complete the exchange in November of 2022 carefully making sure they meet all requirements for a like kind exchange

A. How much gain or loss will Max recognize as a result of the exchange?

B. What basis will Max have in the goat farm?