1. Rajganesh used his accounting training to become a mortgage foreclosure expert. He forecloses on a clients nonrecourse mortgage ($250k unpaid; 300k original balance) when they stop making payments. The property had a FMV of $200k, and a basis of $300k. What are the total income/losses (if any) that result from the foreclosure / mortgage forgiveness?

1. Loss on Foreclosure $100k / Ordinary Income $50k
2. Loss on Foreclosure $100k / Ordinary Loss $50k
3. Loss on Foreclosure $50k / No Forgiveness Gain or Loss
4. Loss on Foreclosure $0k / Ordinary Loss $50k
5. Not enough information on forgiveness