In March of Year 1, Gerhard purchased an office building in Arizona. He paid $600,000 cash and obtained a mortgage of $2,400,000 for the balance. In…

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In March of Year 1, Gerhard purchased an office building in Arizona. He paid $600,000 cashand obtained a mortgage of $2,400,000 for the balance. In June of Year 5, the outstandingmortgage on the office building was $1,500,000 and the building was worth $4,500,000.In September of Year 1, Harold purchased an office building in Denmark in Year 1 for$500,000 in a cash deal. In August of Year 2, he purchased a warehouse in Nevada for$1,500,000 in a cash deal. He subsequently obtained a loan against the warehouse. In Juneof Year 5, the outstanding loan on the warehouse was $1,200,000. In that same year, thevalue of the warehouse was $3,300,000 and the value of the Danish building was $800,000.In June of Year 5, Gerhard transfers the Arizona building to Harold in exchange for Harold’sDanish building, his warehouse and cash. They each agree to assume the debt on theproperty received.What is Gerhard’s recognized gain/loss in Year 5?

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