Horace sells equipment with an adjusted basis of $20,000 to his great-grandson, Matthew, for its fair market

Question:

Horace sells equipment with an adjusted basis of $20,000 to his great-grandson, Matthew, for its fair market value of $15,000. Matthew sells the equipment to an unrelated party for $17,000. What are Matthew's realized and recognized gain (loss) upon the sale?
Realized Gain (Loss) Recognized Gain (Loss)
a. ($3,000)....................................................($3,000)
b. $2,000.............................................................$0
c. $0..................................................................$0
d. $2,000........................................................$2,000