**Answer:**

a). Mary’s realized gain is $350,000

b). Mary’ recognized gain is $200,000

c). Mary’s basis of the newly acquired office building is $680,000

**Explanation:**

a) In order to calculate Mary’s realized gain/ loss we would have to make the following calculation:

Amount realized= [$230,000 (cash) + $880,000 (office building) + $320,000 (mortgage)] = $1,430,000

Adjusted basis of apartment house given up (1,080,000)

herefore, Realized gain = 1,430,000- $1,080,000= **$350,000
**

b) In order to calculate Mary’ recognized gain/loss we would have to make the following calculation:

b) Recognized gain = $550,000 [$230,000 (cash) + $320,000 (mortgage assumed by Dave is treated as boot received);

Lower of boot received of $550,000 or realized gain of $350,000.

So there is a Postponed gain of = **$200,000**.

c) To calculate Mary’s basis of the newly acquired office building we would have to make the following calculation:

New basis = [$880,000 (fair market value of office building received)-$200,000 (postponed gain)].

=$680,000