Tom operates an illegal drug-running operation and incurred the following expenses: Which of the above amounts reduces his taxable income?
A)$0.
B)$160,000.
C)$279,000.
D)$324,000.
E)None of these.

Question

Tom operates an illegal drug-running operation and incurred the following expenses:  Which of the above amounts reduces his taxable income?
A)$0. 
B)$160,000. 
C)$279,000. 
D)$324,000. 
E)None of these.

Quizplus · Accepted Answer

Cost of goods sold of $160,000 is treated as a negative item in calculating gross income rather than as a deduction.For a drug dealer,all deductions are disallowed.

Tom Operates an Illegal Drug-Running Operation and Incurred the Following