Question

Jackson uses his automobile 82% for business and during 2017 drove a total of 19,200 business miles. Information regarding his car expenses is listed below.

Business parking	$ 270
Auto insurance	2,700
Auto club dues (includes towing service)	324
Toll road charges (business-related)	405
Oil changes and engine tune-ups	432
Repairs	297
Depreciation allowable	5,400
Fines for traffic violations (incurred during business use)	540
Gasoline purchases	5,940

What is Jackson's deduction in 2017 for the use of his car if he uses:

If required, round your answers to nearest dollar.

a. The actual cost method?
$

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b. The automatic mileage method?
$

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Answer 1

Solution a)

Solution b) since standard mileage rate is not given. we have computed standard rate i.e. 70 cent per mile ( total expenses i.e. 16308 divided by total miles travelled 23414.63 miles ). Total miles = Business miles / Used in business i.e. 23414.63 = 19200 / 0.82.

Now deductions as per automatic mileage method is $13440 i.e. 70 cent x 19200