Solution-Neither amanda nor kc can deduct any of the above

Neither amanda nor kc can deduct any of the above

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Reference no: EM131796771

Amanda and KC both operate illegal businesses. Amanda operates a gambling business that involveshigh stakes poker games, and an exclusive clientele in the northeastern U.S. KC operates anunlicensed whisky distillery on her property in the Louisiana bayou and sells "under the counter" tobars in New Orleans. Both businesses have gross revenues of $500,000. The businesses incur thefollowing expenses.

	Amanda	KC
	$200,000	$200,000
Bribes to police	$25,000	$25,000
Rent and utilities	$50,000	$50,000
Cost of goods sold	0	$125,000

Which of the following statements is correct?

a. Neither Amanda nor KC can deduct any of the above items in calculating the businessprofit.

b. Amanda should report profit from her business of $250,000.

c. KC should report profit from her business of $500,000.

d. KC should report profit from her business of $250,000.

e. None of the above.

Reference no: EM131796771

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Neither amanda nor kc can deduct any of the above

Reference no: EM131796771

Reference no: EM131796771

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