Kitty Runs a Brothel Illegal Under State Law) and Has

Essay

Kitty runs a brothel illegal under state law) and has the following items of income and expense. What is the amount that she must include in taxable income from her operation?


$\begin{array} {l l r } \text { Income } &&\$ 200,000\\ \text { Expenses: } &&\\&\text { Rent } & 8,000 \\ &\text { Utilities } & 2,000 \\ &\text { Bribes to police } & 10,000 \\& \text { Office supplies } & 5,000 \\& \text { Legal fees } & 20,000 \\ &\text { Depreciation } & 14,000 \\ &\text { Ilegal kickbacks } & 15,000 \end{array}$