What does taxable income represent in this context?

Taxable income represents the amount of income that is subject to taxation after accounting for various deductions allowed by tax regulations. In this context, the correct choice reflects this by identifying taxable income as revenue minus expenses, including depreciation for that year.

Depreciation is an important factor because it accounts for the reduction in value of tangible assets over time. This non-cash expense reduces taxable income, accurately reflecting the company's financial situation and its ability to generate profits. By subtracting both operational expenses and depreciation from revenue, the taxable income gives a clearer picture of the actual profitable income that is liable for taxation.

The other options do not incorporate this crucial aspect of depreciation, or they might exclude necessary expenses and capital costs, which do not provide an accurate assessment of what income is subject to tax. Thus, option B correctly encompasses all relevant deductions, allowing for a true representation of taxable income.