Terry and Jim Are Both Involved in Operating Illegal Businesses

question 136

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. Which of the following statements is correct?

• A)Neither Terry nor Jim can deduct any of these 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 these.

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Definitions:

Pharynx

A muscular tube that functions as the part of the digestive and respiratory systems by carrying air from the nose to the larynx and food from the mouth to the esophagus.

Salivary Gland

Glands located in the mouth that produce saliva, which aids in digestion and keeps the mouth moist.

Muscularis Externa

The layer of muscle in the gastrointestinal tract located outside the submucosa, responsible for the movements of peristalsis and segmentation.

Hepatopancreatic Duct

A duct that carries bile from the liver and pancreatic juice from the pancreas into the duodenum.