Submit your solution to the problem in an Excel file. Explain your answer as necessary and be sure your calculations are clearly shown.

Taxpayer Tim owns an apartment building. The building cost $1,750,000, and accumulated depreciation is $369,000. Fair market value is $1,900,000. The building is encumbered by a mortgage of $1,144,000. Tim exchanges the apartment building for an office building with fair market value $1,817,000, encumbered by a mortgage of $1,061,000. Both buildings are rental properties.

Required:

1. What is Tims realized gain or loss?
2. What is Tims recognized gain or loss, if any?
3. What is Tims basis in the office building?