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Pat owns a 1965 Mustang which he uses for personal use. He purchased it four years ago for $22,000, and it currently is worth $27,000.

Pat owns a 1965 Mustang which he uses for personal use. He purchased it four years ago for $22,000, and it currently is worth $27,000. He exchanges it for a 1979 Triumph Spitfire convertible worth $27,000.

What is Pat's recognized gain on the exchange?

What is the adjusted basis for the Triumph Spitfire convertible?

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