Reese and Jake engage in a like-kind exchange. Reese transfers real estate with a fair market value of $500,000 and an adjusted basis of $200,000 to Jake. Jake transfers real estate worth $700,000 and an adjusted basis of $250,000, plus a $200,000 mortgage on the property, to Reese. What is Jake's potential or deferred gain before and after the transaction?

$450,000 potential gain before the transaction; $50,000 potential gain after the transaction.

$250,000 potential gain before the transaction; $50,000 potential gain after the transaction.

$450,000 potential gain before the transaction; $250,000 potential gain after the transaction.

$250,000 potential gain before the transaction; $200,000 potential gain after the transaction.