Amanda and KC both operate illegal businesses. Amanda operates a gambling business thatinvolves high stakes poker games, and an exclusive clientele in the northeastern U.S. KC operates an unlicensed whisky distillery on her property in the Louisiana bayou and sells under the counter to bars in New Orleans. Both businesses have gross revenues of $500,000. The businesses incur the following expenses. Amanda KC Employee salaries $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 business profit. 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