In 2000, Michael purchased land for $100,000. Over the years, economic conditions deteriorated, and the value of

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In 2000, Michael purchased land for $100,000. Over the years, economic conditions deteriorated, and the value of the land declined to $60,000. Michael sells the property in this year, when it is subject to a $30,000 nonrecourse mortgage. The buyer pays Michael $34,000 cash and takes the property subject to the mortgage. Michael incurs $5,000 in real estate commissions. Michael’s gain or loss on the sale is

a. $4,000 gain.
b. $1,000 loss.
c. $36,000 loss.
d. $41,000 loss.