Kareem bought a rental house in March 2011 for $300,000, of which $50,000 is allocated to the land and $250,000 to the building. Early in 2013, he had a tennis court built in the backyard at a cost of $7,500. Kareem has deducted $30,900 for depreciation on the house and $1,300 for depreciation on the court. In January 2016, he sells the house and tennis court for $330,000 cash.
a. What is Kareem's realized gain or loss?
b. If an original mortgage of $80,000 is still outstanding and the buyer assumes the mortgage in addition to the cash payment, what is Kareem's realized gain or loss?