Larry is the sole proprietor of a trampoline shop. During 2016, the following transactions occurred:

Larrys personal yacht was stolen on September 5. The yacht had been purchased in August at a cost of $25,000. The fair market value immediately preceding the theft was $19,600. Larry was insured for 50% of the original cost, and he received $12,500 on December 1.

what are the amount and nature of recognized gain or loss?