Your client, I. M$.$ Wheeler, is considering exchanging commercial property with R$.$E$.$ Investments, Inc.

Wheeler owns a warehouse which she has held for investment since $2015$ with a fair market value of $$675,000,$ subject to a mortgage of $$350,000$ and an adjusted basis of $$175,000.$

R$.$E$.$ Investments owns a rental property with a fair market value of $$540,000,$ subject to a mortgage of $$365,000.$

The planned transaction is for Wheeler to exchange his property for R$.$E$.$ Investments' property plus $$150,000$ cash. Each party will assume the mortgage on the property received.

Wheeler wants to make sure that the transaction qualifies for IRC Section $1031$ like$-$kind exchange and has asked you to provide a memo detailing the requirements that must be satisfied for like$-$kind exchange treatment. Your memo should also analyze any gain realized and$/$or recognized, the taxation, if any, and Wheeler$$s basis in the new property.