Dana, who around the city is generally referred to simply as "The Dane," runs an illegal gambling joint. Here are her income and expenses. Calculate her net taxable income from the gambling joint.
Gross Income/Sales $300,000
Expenses
Rent $30,000
Maintenance and Cleaning $6,000
Bribes to police and inspectors $20,000
Supplies $4,000
Food and drink costs $15,000
Accounting and Legal $10,000
Fines and penalties paid $8,000
Depreciation $10,000
| Calculation of Net Taxable Income From Gambling Joint - Illegally Operated | |||
| Particulars | Amount | ||
| Gross Income/Sales | 300000 | ||
| Less : Allowable Expenses | |||
| Rent | 30000 | ||
| Maintenance and Cleaning | 6000 | ||
| Supplies | 4000 | ||
| Food and Drinks Cost | 15000 | ||
| Accouning and Legal | 10000 | ||
| Depreciation | 10000 | 75000 | |
| Net Taxable Income | 225000 | ||
| Bribes to Police and Inspectors | 20000 | ||
| Fines and Penalties | 8000 | ||
| Disallowed Expenses | 28000 | ||
| Internal Revenue Code Section 280E Specifically disallows a deductions or Credit for any expenses in any business which is illegal | |||
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