Final answer:
Bayarma's gain on the sale of her land is calculated by subtracting the adjusted basis from the selling price, resulting in a gain of $40,000. The mortgage balance does not directly affect the gain calculation.
Step-by-step explanation:
The question pertains to calculating the gain or loss on the sale of Bayarma's land. Bayarma's land has an adjusted basis of $610,000, and she sells it for $650,000 while it is subject to a $350,000 mortgage. To calculate the gain, we subtract the adjusted basis from the selling price, which does not include the mortgage balance. Thus, the gain is calculated as follows:
Selling Price = $650,000
Adjusted Basis = $610,000
Gain = Selling Price - Adjusted Basis
Gain = $650,000 - $610,000
The gain on the sale is therefore $40,000. It's important to note that the mortgage balance does not factor into the gain calculation directly, but it must be paid off from the sale proceeds.