In-Class Exercises for Class Session #6 1. Taylor Inc. owns and operates a cannabis business that is legal under California (state) law but is illegal under Federal law. Taylor has several expenses: cost of goods sold: $35,000, rent: $60,000, wages: $10,000, bribes to local government business enforcement officials: $2,500. For the year Taylor has $1,000,000 of gross income from sales of cannabis (marijuana). How much of the above expenses reduces it taxable income for the year