Lydia owns a piece of undeveloped land with a fair market value of $600,000 that is debt free. Her tax basis in the property is $200,000. Manuel owns an apartment building with a fair market value of $750,000 that is subject to a mortgage of $150,000. His tax basis in the property is $300,000, . They have decided to exchange properties. Lydia will receive the apartment building from Manuel and assume responsibility for the related mortgage. Manuel will receive the land from Lydia.

Calculate the gain or (loss) realized, gain or (loss) recognized and tax basis of the replacement property for Lydia and Manuel.

How would your answers for Manuel change if his tax basis in the apartment building was $800,000?