TAX :)

Axel and Big Tiny both operate businesses in Colorado. Axel operated a poker club in Vail. Gambling is illegal in Colorado. Big Tiny operates a medical marijuana facility in Colorado Spring, which is a legal business for state purposes only. Both businesses have gross revenue of $500,000. The business incur the following expenses

Axel Big Tiny

Employee Salaries $200,000 $200,000

Illegal kickbacks to local councilwoman 20,000 20,000

Bribes to local EPA official 0 25,000

Bribes to local police 25,000 0

Rent 40,000 40,000

Interest paid on business loan 10,000 10,000

Insurance coverage for facility & employees 6,000 6,000

Utilities and Telephone 10,000 10,000

Cost of good sold 0 125,000

For Federal tax purposes only, compute Axels and Big Tinys net profit from their businesses (pleas show work)

Axel Big Tiny

Gross Revenue

Cost of goods sold

Gross Income

Expense: ___________

Expense: ___________

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Expense: ___________

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Net Profit