On March 1 of the current year, Kimberly disposes of shares for cash proceeds of $80,000 to her spouse, Rebecca.

The shares have a total cost of $200,000 and a fair market value of $80,000.

Rebecca still holds the shares on April 10 of the current year.

Which of the following is a tax implication of the transaction

1) The capital loss for Kimberly is deemed to be nil.

2) Kimberly has a capital loss of $120,000.

3) The shares have an adjusted cost base of $80,000 for Rebecca.

4) Rebecca has a capital loss of $120,000.