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

question 138

Multiple Choice

Tom operates an illegal drug-running operation and incurred the following expenses: $$\begin{array} { l r } \text { Salaries } & \$ 75,000 \\\text { Ilegal kickbacks } & 20,000 \\\text { Bribes to border guards } & 25,000 \\\text { Cost of goods sold } & 160,000 \\\text { Rent } & 8,000 \\\text { Interest } & 10,000 \\\text { Insurance on furniture and fixtures } & 6,000 \\\text { Utilities and telephone } & 20,000\end{array}$$ Which of the following amounts reduces his taxable income?

• A) $119,000.
• B) $160,000.
• C) $279,000.
• D) $324,000.
• E) None of these.