Wanda sells stock in Martin Corporation to her brother Willis for $1,800. She had purchased the stock four years ago for $3,000 and the current fair market value of the stock is $1,800. Willis paid her $1,800 for the stock. Which of the following statements is correct regarding the tax consequences of this transaction?

If Willis subsequently sells the stock to an unrelated party for $3,500, he will realize a gain of $1,700.

Wanda has a recognized loss of $1,200.

If Willis subsequently sells the stock to an unrelated party for $2,200, he will have no gain or loss.

If Willis subsequently sells the stock to an unrelated party for $3,500, he will have no gain or loss.