James corporation exchanges a building (fair market value = $800,000, adjusted basis = $600,000) that has a $100,000 mortgage for another building owned by Pete Corporation (fair market value = $1,100,000, adjusted basis = $600,000) that is encumbered by a $400,000 mortgage. Each party assumed the mortgage on the building received. What are James's and Pete's realized gains on this exchange, respectively?
1. $200,000, $500,000
2. $200,000, $600,000
3. $500,000, $500,000
4. $500,000, $500,000
5. None of the above