Robins automobile, which she uses exclusively in her trade or business, was damaged in an accident. The adjusted basis of the automobile prior to the accident was $8,000. The fair market value of the automobile before the accident was $10,000 and the fair market value of the automobile after the accident was $500. Insurance proceeds of $9,500 were received. What are Robins income tax consequences resulting from this transaction?

$0.

$1,500 gain.

$500 loss.

$1,500 loss.