In 2014, Micah Johnson (SSN 000-22-1111) is employed as a manager and incurs the

Question

In 2014, Micah Johnson (SSN 000-22-1111) is employed as a manager and incurs the following unreimbursed employee business expenses:

Airplane and taxi fares                                                             $4,000

Lodging away from home                                                         $5,000

Meals while away from home                                                   $1,000

Automobile expenses (related to 100% of the use of his personal automobile):

         Gasoline and oil                                                               $8,500

         Repairs                                                                            $1,000

         Insurance                                                                            $900

         Depreciation                                                                     $1,775

         Parking and tolls (includes only business use)                   $100

Total                                                                                         $22,275

Johnson receives a $7,800 reimbursement for the travel expenses. He did not receive any reimbursement for the auto expenses. He uses his personal automobile 80% for business use and placed his current automobile in service on October 1,2010. Total business miles driven during the year (evenly throughout the year) amount to 26,400, his commuting miles in 2014 amount to 2,000 (average daily roundtrip of 7 miles), and other personal miles amount to 4,600 miles. Johnson's AGI is $60,000, and he has no other miscellaneous itemized deductions.

a) Calculate Johnson's expense deduction using the 2014 Form 2106 (Employee Business Expenses) based on actual automobile expenses and other employee business expenses.

b) Calculate Johnson's expense deduction for 2014 using the standard mileage rate method and other employee business expenses. (Assume that none of the restrictions on the use of the standard mileage rate method are applicable)

Explanation / Answer

UNREIMBURSED EXPENSE=$22,275

REIMBURSED TRAVEL EXPENSE=$7,800

TOTAL BUSINESS MILES DRIVEN DURING THE YEAR=26,400

COMMUTING MILES=2,000

PERSONAL MILES=4,600

AGI=$60,000

a)FOLLOWING POINTS ARE CONSIDERED FOR DEDUCTING TRAVEL EXPENSE

b) CALCULATION OF JHONSON'S EXPENSE DEDUCTION USING STANDARD MILEAGE RATE

TOTAL BUSINESS MILES=26,400

LESS:COMMUTING MILES=2,000

NET MILES COVERED=24,400(ASSUMED THAT PERSONAL MILES ARE NOT COVERED)

THE STANDARD MILEAGE RATE FOR 2015 IS 57.5 CENTS PER MILE

FOR 24,400 MILES IT IS =24,400*57.5 CENTS=14,03,000 CENTS=$14,030

HENCE EXPENSE DEDUCTION IS $14,030

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.