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

question 47

Multiple Choice

Tom operates an illegal drug-running operation and incurred the following expenses:
Salaries
$ 75,000
Illegal kickbacks
20,000
Bribes to border guards
25,000
Cost of goods sold
160,000
Rent
8,000
Interest
10,000
Insurance on furniture and fixtures
6,000
Utilities and telephone
20,000
Which of the above amounts reduces his taxable income?


Definitions:

Title Theory

A legal concept in real estate law where the lender holds title to the property until the loan is paid off by the borrower.

Lien Theory

A concept in real estate law where the mortgage holder has a lien on the property as security for the underlying loan, but the borrower retains title to the property.

Title Theory

Title theory pertains to mortgage law where the mortgage lender holds title to the mortgaged property until the borrower has fully paid off the loan.

Mortgages

Legal agreements in which a lender lends money at interest in exchange for taking title of the borrower's property, with the condition that the conveyance of title becomes void upon the payment of the debt.

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