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My answer is (B). It took me 01:31.

(A) Gambling gain is indeed an unusual income. For one, only a minority of people engage in gambling. For another, many gamblers lose money while enriching the house.

So, when I first read this version, my reason of eliminating it was that the subordinate clause (introduced by because) does not explain the main clause. We can argue that, rightfully, if we understand "their income" means "gambling income", the relationship between two clauses is super clear. Without such epiphany, though, the use of "their income" flummoxes me.

Besides, the use of passive voice ("be raised") does not sport direct writing style.

(B) "that income" makes this version's meaning so much clearer! Only after reading (B) did I start to appreciate the meaning of (A). One word change (from "their" to "that") makes such a huge difference!

Besides, no passive voice is used.

(C) Again, a reasonable reader could not immediately understand the intended meaning of "reporting the income as business revenue.“ Making reader guess is not a writing style GMAT espouses.

(D) See above.
Also, passive voice is used.

(E) This part "because of the red flags not having been raised at the IRS by the reporting of gambling income" is just too convoluted to bear. Also, passive voice is used.
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Because red flags are likely to be raised at the IRS by the reporting of gambling income, business owners who report their income as business revenue is less likely to undergo an audit.

Quote:
A) Because red flags are likely to be raised at the IRS by the reporting of gambling income, business owners who report their income as business revenue is less likely to undergo an audit.
Meaning inconsistent. S-V verb tense error.
Quote:
B) Because the reporting of gambling income is likely to raise red flags at the IRS, business owners can reduce their chances of undergoing an audit by reporting that income as business revenue.
"That" here looks ambiguous in initial go and I too crossed it out in the first go, but after going through all the answer choices, "meaning" of this sentence makes much more sense and also the referent of "that" comes out of the shadow as "gambling income". Author wants Business dealers to not disclose their incomes as gambling incomes rather disclose "that" income as business income or their will be "Audit". So, this is the correct answer choice in that view. Correct.
Quote:
C) Business owners can reduce their chances of undergoing an audit by reporting the income as business revenue, because the reporting of gambling income is likely to raise red flags at the IRS.
Though grammatically correct, the meaning of this sentence is slightly off. This sentence makes it seem that business and gambling incomes as two separate entities whereas both are actually the same. Incorrect.
Quote:
D) Their chances of undergoing an audit are reduced by business owners who report that income as business revenue, because the reporting of gambling income is likely to raise red flags at the IRS.
What does "their" refer to here exactly? This sentence is absolute bs. Incorrect.
Quote:
E) The reporting of that income as business revenue can reduce the chances of business owners of undergoing an audit, because of the red flags not having been raised at the IRS by the reporting of gambling income.
"that" income? What that income? Non-sensible.
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Hi

if any Expert can help me on this

The question stem talks about business owners who generally report their gambling Income as Business revenue is( correct is are) less likely to undergo Audit but the correct choice says business owners can reduce their chances of undergoing an audit by reporting that income as business revenue. Is this shift from Original Question/intended meaning acceptable. ( Mu doubt is if original stem talks about something that has already happened or on going thing i.e. "Business owners who report" then can correct choice be in "Can reduce" form.

A. Because red flags are likely to be raised at the IRS by the reporting of gambling income, business owners who report their income as business revenue is less likely to undergo an audit.

B. Because the reporting of gambling income is likely to raise red flags at the IRS, business owners can reduce their chances of undergoing an audit by reporting that income as business revenue.
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Vikas1993
Hi

if any Expert can help me on this

The question stem talks about business owners who generally report their gambling Income as Business revenue is( correct is are) less likely to undergo Audit but the correct choice says business owners can reduce their chances of undergoing an audit by reporting that income as business revenue. Is this shift from Original Question/intended meaning acceptable. ( Mu doubt is if original stem talks about something that has already happened or on going thing i.e. "Business owners who report" then can correct choice be in "Can reduce" form.

A. Because red flags are likely to be raised at the IRS by the reporting of gambling income, business owners who report their income as business revenue is less likely to undergo an audit.

B. Because the reporting of gambling income is likely to raise red flags at the IRS, business owners can reduce their chances of undergoing an audit by reporting that income as business revenue.

Do not treat option (A) any differently from other four options. (A) is just one of five versions, and our aim is to find one best version (with no grammar error, no ridiculous meaning or convoluted style, etc.) Evaluate each option without taking the explicit or implied meaning of choice (A) into consideration. That is the right mindset we shall adopt.

(A) is not the arbiter of the "intended meaning". We are not the author, so we really do not know what "intended meaning" is.

Put it another way, any version can be option (A), and the best answer remains the same. Indeed, some third-party questions may actually rely on the "intended meaning" to eliminate choices. (You can also find those questions here.) Those questions are not well crafted.
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