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:

Needle Holder

A surgical instrument used to hold a suturing needle during the process of stitching wounds or surgical incisions.

Suture Needle

A type of needle used by surgeons to close wounds or surgical incisions, typically designed to be strong and sharp for passing through tissue with minimal trauma.

Suturing Process

The method of closing a wound or surgical incision with stitches to facilitate healing.

Aseptic Technique

A procedure used in medical settings to prevent contamination by pathogens, maintaining a sterile environment during clinical interventions.