They did do it through an exchange facilitator, right?  Would have been better if they had broken the sale down to two transactions and just exchanged the business part of the proceeds. And maybe try to structure the purchase as two transactions, also.  But it still looks like they traded down, so there would be some taxable gain.  Maybe $1 million for proceeds and $600K for the business part of the new place?  Or are they not living in the new home?