Your portable sawmill was completely destroyed by a fire and you carried no insurance on the property. The adjusted basis for depreciation of the sawmill building and equipment at the time of the fire was $6,500, and its fair market value was $5,000. The value of the equipment after the fire was only scrap value, amounting to $300.

A. What is your deductible casualty loss? B. Assume that the sawmill was damaged by the fire but not completely destroyed. Just before the fire, the sawmill had a fair market value of $5,000 and immediately after the fire its fair market value was $3,500. Under these facts, what is your deductible casualty loss?