37. Penny, a full-time biochemist, loves stock car racing. To feed her passion, she bought a used dirt-track car and has started entering some local dirt-track races. The prize money is pretty small ($1,000 for the winner), but she really is not in it for the money. Penny reported the following income and expenses from her nights at the track: Prize Money Expenses: Transportation from her home to the races Depreciation on the dirt-track car Entry fees Oil, gas, supplies, repairs for the dirt track car $2,500 1,000 4,000 3,500 2,050 What are the tax effects of Penny's racing income and expenses assuming that the racing activity is a hobby for Penny? 40. Doctor Bones prescribed physical therapy in a pool to treat Jack's broken back. In response to this advice (and for no other reason), Jack built a swimming pool in his backyard and strictly limited use of the pool to physical therapy. Jack paid $25,000 to build the pool, but he wondered if this amount could be deducted as a medical expense. Determine if a capital expenditure such as the cost of a swimming pool qualifies for the medical expense deduction.