Question

Quan operates an illegal game room in Houston. He files a tax return claiming deductions as follows: Rent $10,000, Supplies $5,000, Fines paid to the city $12,000, Bribes paid to police officers $8,000. The IRS should allow Quan to deduct

		$0
		$10,000
		$15,000
		$33,000
		$35,000

Answer 1

Allowed deduction
	Amount in $
Rent	10,000
Supplies	5,000
Total	15,000
Note: Fine paid to the city & bribe paid to police officers will not be allowed as deduction as per Section 280E of Interbal revenue Code.
Correct answer is option 3 (i.e. $ 15,000 ).