In a 1031 like-kind exchange, Rafael exchanges equipment that originally cost $200,000. On the date of

Question:

In a § 1031 like-kind exchange, Rafael exchanges equipment that originally cost $200,000. On the date of the exchange, the equipment given up has an adjusted basis of $85,000 and a fair market value of $110,000. Rafael pays $15,000 and receives equipment with a fair market value of $125,000. What is the amount and character of Rafael's gain or loss?