Mr. Richards made a personal loan of $6,000 to Mr. Henry on January 30, Year 1, so that he could meet personal obligations. The loan was evidenced by a promise to pay and was to bear interest at the prevailing rate. Mr. Henry repaid $1,000 of the loan in Year 2. On June 30, Year 3, Mr. Henry filed for bankruptcy, and settlement was made with his creditors. Under the bankruptcy plan, Mr. Richards received $1,000 in settlement of his claim in Year 3. This is the only gain or loss incurred by Mr. Richards in Year 3. On his Year 3 income tax return, Mr. Richards can deduct A. $4,000 as a short-term capital loss. $4,000 as a long-term capital loss. B. C. $3,000 as a short-term capital loss. D. $4,000 as an ordinary loss