Three years ago, Morris loaned Alma $5,000 (Year 1) with the understanding that the loan would be repaid in two years. Last year (Year 3) Alma filed for bankruptcy, and Morris learned that he would receive $0.10 on the dollar. In the current year, Year 4, the final settlement was made, and Morris received $300. Assuming the loan is a nonbusiness bad debt, how should Morris account for the loan?

a. $4,700 ordinary loss in the current year.

b. $3,000 ordinary loss last year and $1,700 ordinary loss in the current year

c. $4,700 short-term capital loss in the current year.

d. $3,000 short-term capital loss last year and $1,700 short-term capital loss in the current year.