Terry and Jim Are Both Involved in Operating Illegal Businesses

question 106

Multiple Choice

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. $$\begin{array} { l r r } & \text { Terry } & \underline { \text { Jim } } \\\text { Employee salaries } & \$ 200,000 & \$ 200,000 \\\text { Bribes to police } & 25,000 & 25,000 \\\text { Rent and utilities } & 50,000 & 50,000 \\\text { Cost of goods sold } & - 0 - & 125,000\end{array}$$ 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.

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Definitions:

Counterconditioning

A therapy technique where a person is taught to replace an undesirable response to a stimulus with a more desirable one.

Resistance

In psychotherapy, the patient's unwillingness to discuss or approach certain topics, thoughts, or experiences.

Transference

An unconscious redirection of feelings from one person to another, often reproduced in therapy sessions.

Interpretation

The act of explaining or giving meaning to information, events, or behaviors based on one's perspective or understanding.