Final answer:
Kareem's realized gain or loss can be calculated by considering his equity before and after assuming the mortgage. If his equity after assuming the mortgage is negative, then he would have a realized loss.Kareem would have a realized loss of $30,000.
Step-by-step explanation:
To determine Kareem's realized gain or loss, we need to calculate his equity before and after assuming the mortgage. Using the information provided, we know that the original mortgage amount is $80,000. Assuming Kareem paid off a portion of the loan, we need to consider his equity in the property.
If we only consider the cash payment, Kareem's equity would be the difference between the market value of the house and the outstanding mortgage. However, since he is assuming the mortgage in addition to the cash payment, his equity would be the difference between the market value and the outstanding mortgage minus the additional mortgage assumed.
Let's assume the market value of the house is $200,000 and Kareem is assuming a mortgage of $150,000. Kareem's equity before assuming the mortgage would be $200,000 - $80,000 = $120,000.
After assuming the mortgage, his equity would be $200,000 - $80,000 - $150,000 = -$30,000.
Therefore, Kareem would have a realized loss of $30,000.