Sheila Sells Stock,which Has a Basis of $12,000,to Her Daughter

Sheila sells stock,which has a basis of $12,000,to her daughter for $7,000,the stock's fair market value.Subsequently,the daughter sells the stock to an unrelated party for $5,000.Which of the following is true for Sheila and her daughter?

A) $$\begin{array} {| l | l |} \hline\text { Sheila } & \text { Daughter } \\\hline \text { recognizes no loss } & \text { recognizes loss of } \$ 2,000 \\\hline\end{array}$$
B) $$\begin{array} {| l | l |} \hline\text { Sheila } & \text { Daughter } \\\hline \text { recognizes no loss } & \text { recognizes loss of } \$ 5,000 \\\hline\end{array}$$
C) $$\begin{array} { | l | l | } \hline \text { Sheila } & \text { Daughter } \\\hline \text { recognizes loss of } \$ 3,000 & \text { recognizes loss of } \$ 5,000 \\\hline\end{array}$$
D) $$\begin{array} {| l| l| } \hline\text { Sheila } & \text { Daughter } \\\hline \text { recognizes loss of } \$ 3,000 & \text { recognizes loss of } \$ 2,000 \\\hline\end{array}$$