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 the above.

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 the above.

Quizplus · Accepted Answer

The only amount that reduces Tom's taxable income is the bribe of $160,000, as it is considered an ordinary and necessary expense for his illegal drug-running operation. The other expenses are not deductible as they are related to illegal activity.

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