Terry and Jim Are Both Involved in Operating Illegal Businesses

question 101

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 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:

Concealment

The act of hiding or withholding information or facts intentionally.

Nondisclosure

Refers to the act of not sharing certain information that is usually confidential or proprietary.

Assertion

A confident and forceful statement of fact or belief.

Unintentional

An action or outcome occurring without deliberate intent or plan.