In 2016, Jasmin Loaned Her Friend Janelle $5,000 to Invest

In 2016, Jasmin loaned her friend Janelle $5,000 to invest in various stocks. Janelle signed a note to repay the principal with interest. In 2017, Janelle made risky stock investments and incurred large losses. In late 2017, Janelle declared personal bankruptcy and Jasmin was unable to collect any of her loan. Jasmin had no other gains or losses in 2015 or 2016. Her income from wages in both 2016 and 2017 was $50,000. The result is:

A) Jasmin deducts a business bad debt of $5,000 in 2017.
B) Jasmin deducts a $5,000 capital loss in 2017.
C) Jasmin deducts a business bad debt of $3,000 in 2017 and carries $2,000 over to subsequent years.
D) Jasmin deducts a $3,000 capital loss in 2017 and carries $2,000 over to subsequent years.
E) Jasmin must amend her 2016 tax return to deduct the loss.