Earl Cook, who worked as a machinist for Precision Corp., loaned Precision $1,000 in 2007. Cook did not own any of Precision’s stock, and the loan was not a condition of Cook’s employment by Precision. In 2010, Precision declared bankruptcy, and Cook’s note receivable from Precision became worthless. What loss can Cook claim on his 2010 income tax return?

a. $0

b. $ 500 long-term capital loss.

c. $1,000 short-term capital loss.

d. $1,000 business bad debt.