Pekoe sold stock to his sister Rose for $12,000, its fair market value. Pekoe bought the stock 5 years ago for $16,000. Also, Pekoe sold Earl (an unrelated party) stock for $6,500 that he bought 3 years ago for $8,500. What is Pekoe’s recognized gain or loss?
a. $6,500 loss
b. $6,000 loss
c. $3,000 loss
d. $2,000 loss
e. $1,000 gain