Dear jmanefiore -
My analysis of your transaction is that you are selling a property with a fair market value of $1,450,000. It has mortgage debt of $400,000 that will be assumed, for a net of $1,050,000.
You are receiving a parcel with a fair market value of $750,000 subject to a mortgage of $100,000 and a note in the amount of $400,000, for a net of $1,050,000 ($750K + $400K - $100K).
Your sales price is $1,450,000 with a gain of $700,000. You are receiving a note of $400,000, net relief of indebtedness of $300,000 ($200K + $200K - $100K) and property with a value of $750,000. The like kind property is only $750K thus $700K will be fully taxable.
You may be able to use the installment method for the portion of the gain that relates to to installment loan.
Your sale price is $1.4million. Your gain is $650K.
You are receiving like kind property of $700K. Therefore you are receiving other property worth $700K. Because of this 100% of your gain will be taxable.
Your gross profit percentage is 46.4285% (650/1400). In the year of the sale you are receiving real estate worth $700K and net debt relief of $300K for a total of $1million. The gain to report will be $464,285. The balance of the gain will be reported as the principal on the $400K note is received.