Two independent companies,MarigoldCo. andCullumberCo., are in the home building business. Each owns a tract of land held for development, but each would prefer to build on the other's land. They agree to exchange their land. An appraiser was hired, and from her report and the companies' records, the following information was obtained:

Marigold's LandCullumber's LandCost and book value$581400$331200Fair value based upon appraisal810000630900

The exchange was made, and based on the difference in appraised fair values,Cullumberpaid $179100toMarigold. The exchange lacked commercial substance.

For financial reporting purposes,Marigoldshould recognize a pre-tax gain on this exchange of

$0.

$228600.

$179100.

$50546.