Question

Andrew is a sole proprietor and drove his car a total of 10,000 miles this year. 3,000 of these miles were for business purposes. He incurred the following expenses related to his car:

• Gas: $1,200
• Insurance: $500
• Interest on his car loan: $800
• Tolls to get to his clients: $100
• Depreciation: $2,000

  Using the standard mileage method (rate $0.58 per mile) what is Andrew’s total automobile deduction this year? (3 pts.)

Answer 1

Standard Mileage method the standars rate is multiplied by the business milege used in the tax period inorder to determine the qualifying amount for the purpose of tax deduction.

Here in this case ,

Business Milleage is 3000

Standard Rate =0.58

There fore Deduction as per

Standard Mileage method = Standard Rate x Business Milleage

Standard Mileage method = 0.58 x3000

Standard Mileage method =$1,740

Deduction allowed as per Standard Mileage method is $ 1,740