Question

# Jackson, who is self-employed, uses his automobile 76% for business and during 2018 drove a total...

Jackson, who is self-employed, uses his automobile 76% for business and during 2018 drove a total of 15,000 business miles. Information regarding his car expenses is listed below.

 Business parking \$ 280 Auto insurance 2,800 Auto club dues (includes towing service) 336 Toll road charges (business-related) 420 Oil changes and engine tune-ups 448 Repairs 308 Depreciation allowable 5,600 Fines for traffic violations (incurred during business use) 560 Gasoline purchases 6,160

What is Jackson's deduction in 2018 for the use of his car if he uses:

a. The actual cost method?
b. The automatic mileage method?

**SHOW WORK AND EXPLAIN**

solution :

A.

Real cost Method

Derivation = 140 + 200 + (1300 + 180 + 210 + 160 + 2850 + 2800)*90% = 140 + 200 + 6750 = \$7090

Business Parking and Toll street charges have been acquired full for business.

Fines are not permitted as conclusion.

B.

Programmed Mileage Method

Conclusion = 14000*0.545 = \$7630

Standard Mileage Rate = 54.5 pennies per mile.

He can deduct \$540 more by utilizing the Sutomatic Mileage technique than by utilizing the Actual Expenses strategy

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