Ron Weasley owns undeveloped land which has an adjusted basis of $80,000 and FMV of $92,000 in Massachusetts. On January 4, 2017, he exchanged the land with Draco Malfoy (not a related party) for undeveloped land in Oregon and $3,000 cash.

Draco has an adjusted basis of $72,000 in his land and the FMV is $89,000. Because of the real estate boom in Massachusetts, Draco sells the land on September 1, 2018 for $120,000.

Answer these questions in a letter to Ron:

1. What are Ron's recognized gain or loss and adjusted basis for the land acquired on January 4?

2. What are Draco's recogized gain or loss and adjusted basis for the land acquired on January 4?

3. What is Draco's recognized gain or loss from the September 1 sale?

4. What effect does Draco's sale have on Ron?

Ron's address is:

333 Ottery St, Catchpole, Devonshire