What are Lou’s allowable current-year deductions?
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Lou incurred the following business expenses during the year:
Penalty for breach of business contract $3,200
State sales tax penalty for late remittance $2,500
Rent expense $6,000
Office supplies $450
Early withdrawal penalty on investment account at a savings and loan $185
What are Lou’s allowable current-year deductions?
A. $6,635
B. $9,835
C. $12,150
D. $12,335
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