Strong Arm Steve, a cash basis calendar year taxpayer, runs an illegal protection business. Basically, small businesses in his neighborhood pay him money to gain protection from theft. During the current year, a bill, H$.$R$.55,$ is introduced into the state legislature which, if enacted, would legalize his protection racket. Strong Arm Steve had the following expenses for the year:

Operating expenses in conducting his business

Payoffs to the cops to allow him to bully small businesses Newspaper ads supporting H$.$R$.55,$ no mention of his business in $$100,00020,0005,000$ the ad$.$

Political contributions to legislators who support H$.$R$.55$

$10,000$

Of these expenditures, Strong Arm frieve may deduct:

$$100,000.$

$$120,000.$

$$125,000.$

$$135,000.$