1) Ann Jones uses a dry-cleaning machine in her business, and it was partially destroyed by fire. At the time of the fire, the adjusted basis was $20,000 and its fair market value was $18,000. The adjusted basis after the fire is $10,000 and the fair market value after the casualty is $10,000. How much is the casualty loss?

a. $10,000

b. $8,000

c. $18,000

d. $20,000

2) John Jay, 45, is married and supports his mother, age 67. During the year, he paid $1,300 for prescription medicines for his mother (who is his dependent), $1,000 for prescription medicines for his wife (age 43), and $5,400 for doctor and hospital bills for himself. His gross income is $55,000 and his adjusted gross income is $50,000. In itemizing his deductions, Jay may claim a medical expense deduction, after application of proper limitations, of:

a. $3,950

b. $7,700

c. $1,575

d. $2,700

e. None of these