I have a five-year-old daughter who just started kindergarten this year. Her behavior lately has been way out of line. She had a problem in preschool with respecting authority, and it has now carried over into kindergarten. We have had a problem with it at home as well. She talks back to adults, and she yells. When we tell her that she will have privileges taken away if she doesn't do what she's been asked to do, she says she wants her privileges taken away. Whenever she does something for her dad or me, or if I've asked her to do something for her baby sister (one year old,) she always asks what she will get in return. It seems to always take many times to get her to do something, and then it's a battle. We end up yelling, and I don't like that at all.
We adopted both our daughters when they were infants. Our oldest daughter was four-and-a-half when her sister came along. This really took a toll on all of us, but especially on our older one. She was a basket case over this new baby in our home, "taking her place" and "all" of our attention and everyone else's that had solely been in our older daughter's life. She knows how to use a lot of this to try and get what she wants. She is wise beyond her years. We are really desperate for some guidance.
-- Adoptive Parents --
It's difficult to tell from your question whether your oldest daughter has always been difficult or whether the problem began with the abrupt loss of attention that came with her suddenly adopted sister. If she was difficult from the beginning, her problem is likely to be more serious, and you may need to get help from a psychologist. If it is related to her sister, she may be having true feelings of rejection after having been treated like a princess initially. I usually refer to this extreme sibling rivalry as "dethronement."
It will be helpful if you can give a little one-to-one time to your oldest daughter every day without her sister. When she asks what she'll receive when she does something nice, tell her she'll be appreciated by her sister and her parents. When she says she wants privileges taken away, ignore her statement, but do follow through on the consequences. She does care, but admitting that to you will feel to her like she's admitting defeat.
With a child who pushes limits constantly, parents have to slow their pace and become very thoughtful. As you slow your actions and think about your responses more carefully, your daughter will slow her battle. Your thoughtfulness will also help you to be more reasonable and consistent. I recommend my book How To Parent So Children Will Learn to guide you.