1. Mikhail owns real estate held for investment with a basis of $400,000 and a fair market value of $650,000. He exchanges it for other real estate with a fair market value of $480,000. In addition, Mikhail is relieved of a mortgage on the old property of $200,000, assumes a mortgage on the new property of $100,000, and receives $70,000 in cash. What is Mikhail's recognized gain on the exchange?

1. $0
2. $70,000
3. $170,000

$250,000