Sara Sun transferred three properties to Green Construction: an office building, office equipment in that building, and an adjacent parking garage, in a Sec. 351 exchange, as shown in the table below:

Property	Adjusted Basis	FMV
Office building	$800,000	$110,000
Office equipment	2,000	1,500
Parking Garage	15,000	12,000
	$ 817,000	$123,500

The garage and equipment are free of liabilities, but a $110,000 mortgage remains on the office building. Complete calculations and explain your answers to these questions, referencing all applicable sections of the Internal Revenue Code:

1. If Green Construction assumes the mortgage, what gains and tax-related effects would Freeman and Health Innovations sustain?
2. What if Green Construction does not assume the mortgage? What gains and tax-related effects would Sara Sun and Green Construction sustain?