In 2010, Karen purchased land for $80,000. Over the years, economic conditions deteriorated, and the value of the land declined to $45,000. Karen sells the property in this year, when it is subject to a $20,000 nonrecourse mortgage. The buyer pays Karen $25,000 cash and takes the property subject to the mortgage. Karen incurs $4,000 in real estate commissions.

Karens gain or loss on the sale is:

A) $4,000 Gain B) $1,000 Loss C) $35,000 Loss D) $39,000 Loss