State Allowed Marijuana Activity: Do Regular Business Deduction Rules Apply (or

State Allowed Marijuana Activity: Do Regular Business Deduction Rules Apply (or Those for Drug Dealers) (MO 3.1) Cole England operates Herbal Center in Sacramento, CA, as a sole proprietorship. The distribution of marijuana for medical purposes as well as nonmedical use by adults is legal in CA. This is Coles first year of business operations, and he reports the following tax information: Revenues $200,000 Cost of Goods Sold $120,000 Other Business Expenses $50,000 Cole reported $30,000 of net income on Schedule C this year for Herbal Center. Instructions: Is the net income figure of $30,000 correct? Why or why not? What is your opinion on the federal law regarding deducting expenses of this business ? Why do you agree or disagree with it? Explain your response with two paragraphs of three to six sentences. In order to receive full credit, you MUST include a reference to the tax law(s)/Internal Revenue Code section(s) dealing with this issue.