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. Which of the following statements is correct?

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.

Question

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. Which of the following statements is correct?

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.

Quizplus · Accepted Answer

The Answer of 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. Which of the following statements is correct?

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.

Terry and Jim Are Both Involved in Operating Illegal Businesses