Rex, a Cash Basis Calendar Year Taxpayer, Runs a Bingo

question 69

Multiple Choice

Rex, a cash basis calendar year taxpayer, runs a bingo operation that is illegal under state law.During 2019, a bill designated H.R.9 is introduced into the state legislature, which, if enacted, would legitimize bingo games.In 2019, Rex had the following expenses: $$\begin{array} { l r } \text { Operating expenses in conducting bingo games } & \$ 247,000 \\\text { Payoff money to state and local police } & 24,000 \\\text { Newspaper ads supporting H.R. } 9 & 3,000 \\\text { Political contributions to legislators who support H.R. 9 } & 8,000\end{array}$$ Of these expenditures, Rex may deduct:

• A)$247,000.
• B)$250,000.
• C)$258,000.
• D)$282,000.
• E)None of these.

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Definitions:

Financial Balances

Financial balances refer to the comparison and calculation of financial resources, often focusing on the discrepancies between income and expenses or assets and liabilities.

Consolidated Expenses

Expenses that are combined from all subsidiaries and the parent company when preparing consolidated financial statements, providing a holistic view of the entity's operational cost.

Common Stock

A type of equity ownership in a corporation, with voting rights and potential for dividends, representing a share in the company's profits and losses.

Additional Paid-in Capital

Additional Paid-in Capital is the amount of money paid by investors for shares in a company above the par value of those shares. It represents extra equity capital invested in the company.