Nancy, a calendar-year cash-method taxpayer, lent her brother, Richie, $1,500 in Year 1 to assist him in buying furniture for his home. Richie signed a note and promised to pay Nancy $500 a year plus 10% interest on the unpaid principal. In spite of efforts to collect interest and principal, no payments were received in Year 1 or Year 2. In December Year 2, Richie left the country, and Nancy has no chance of recovery. How will Nancy report the loss on her Year 2 tax return?

• A.$0 (no deduction).
• B.$1,500 short-term capital loss.
• C.$1,650 long-term capital loss.
• D.$1,650 short-term capital loss.