Troy incurs the following expenses in his business,an illegal gambling establishment: $$\begin{array} { | l | r | }
\hline \text { Salaries to employees } & \$ 200,000 \
\hline \text { Insurance expense } & 60,000 \
\hline \text { Utilities expense } & 70,000 \
\hline \text { Bribes to police } & 50,000 \
\hline
\end{array}$$ His deductible expenses are

Question

Troy incurs the following expenses in his business,an illegal gambling establishment: $$\begin{array} { | l | r | } 
\hline \text { Salaries to employees } & \$ 200,000 \
\hline \text { Insurance expense } & 60,000 \
\hline \text { Utilities expense } & 70,000 \
\hline \text { Bribes to police } & 50,000 \
\hline
\end{array}$$ His deductible expenses are

Quizplus · Accepted Answer

Under U.S. tax law, ordinary and necessary business expenses are generally deductible, even for illegal businesses. However, bribes are not deductible. Therefore, the deductible expenses are salaries, insurance, and utilities, totaling $330,000.

Troy Incurs the Following Expenses in His Business,an Illegal Gambling