Business, 02.12.2019 20:31 khalaflaf2684
Terry and jim are both involved in operating illegal businesses. terry operates a gambling business and jim operates a drug running business. both businesses have gross revenues of $500,000. the businesses incur the following expenses.
terry
jim
employee salaries
$200,000
$200,000
bribes to police
25,000
25,000
rent and utilities
50,000
50,000
cost of goods sold
–0–
125,000
which of the following statements is correct and why (1-3 sentence justification)?
a.
neither terry nor jim can deduct any of the above items in calculating the business profit.
b.
terry should report profit from his business of $250,000.
c.
jim should report profit from his business of $500,000.
d.
jim should report profit from his business of $250,000.
e.
none of the above.
Answers: 1
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