Question

Jackson, a self-employed taxpayer, uses his automobile 70% for business and during 2020 drove a total of 26,200 business miles. Information regarding his car expenses is listed below.

Business parking	$ 190
Auto insurance	1,900
Auto club dues (includes towing service)	228
Toll road charges (business-related)	285
Oil changes and engine tune-ups	304
Repairs	209
Depreciation allowable	3,800
Fines for traffic violations (incurred during business use)	380
Gasoline purchases	4,180

What is Jackson's deduction in 2020 for the use of his car if he uses:

If required, round your answers to nearest dollar.

a. The actual cost method?

b. The automatic mileage method?

Answer 1

The actual cost method.

= 7909.7 ={(190+285+[70%(1900+228+304+209+3800+4180)]} even though they are associated with business uses,the fines of 380 are not to be deductible.

The automatic milage method.

= {[26200 miles *0.575+190+285]}

=15,540

It Is better to Opt B) Mileage method as its deduction amount is more and needs less documentation.

Notes:

Business Parking and Toll road charges have been incurred full for business.

Fines are not allowed as deduction.

Standard Mileage Rate = 57.5 cents per mile. As per 2020 Notified by IRS

IF ANY DOUBTS KINDLY MENTION IN COMMENT ,PLEASE LIKE