Chelsea operates an illegal gambling enterprise out of her restaurant.Considering only the following expenses,what amount can Samantha deduct?
$\begin{array}{lr}
\text { Building rent } & \$ 34,000 \
\text { Secretarial services } & 12,000 \
\text { Payments to off-duty policemen to provide security } & 20,000 \
\text { Lease payments for cars given to health inspectors } & 18,000
\end{array}$
A)$ - 0 -
B)$46,000
C)$66,000
D)$72,000
E)$84,000

Question

Quizplus · Accepted Answer

Illegal activities are generally not tax-deductible. Therefore, Samantha cannot deduct any expenses related to Chelsea's illegal gambling enterprise. All of the listed expenses are related to the illegal activity, so the best choice is to deduct $0. However, if Samantha is aware of Chelsea's illegal activity and reports it to the appropriate authorities, she may be eligible for a reward which could be taxable income.

Chelsea Operates an Illegal Gambling Enterprise Out of Her Restaurant