Doris and Lydia are sisters and also are equal partners in the capital and profits of Agee & Nolan. The following information pertains to 300 shares of Mast Corp. stock sold by Lydia to Agee & Nolan.

Year of purchase

2000

Year of sale

2007

Basis (cost)

$9,000

Sales price (equal to fair market value)

$4,000

The amount of long-term capital loss that Lydia recognized in 2007 on the sale of this stock was

  1. $5,000
  2. $3,000
  3. $2,500
  4. $0