Ella is the regional sales manager for a fast-food chain. She starts her work da

Question

Ella is the regional sales manager for a fast-food chain. She starts her work day by driving from home to the regional office, works there for several hours, and then visits the three sales outlets in her region. Relevant mileage is as follows:

Travel

Miles

Home to regional office

10

Regional office to sales outlet 1

13

Sales outlet 1 to sales outlet 2

11

Sales outlet 2 to sales outlet 3

  9

Sales outlet 3 to home

15

If Ella uses the automatic mileage method and works 240 days in 2015, what is her deduction for the year? Round your answer to the nearest dollar.

Ella is the regional sales manager for a fast-food chain. She starts her work day by driving from home to the regional office, works there for several hours, and then visits the three sales outlets in her region. Relevant mileage is as follows:

Travel

Miles

Home to regional office

10

Regional office to sales outlet 1

13

Sales outlet 1 to sales outlet 2

11

Sales outlet 2 to sales outlet 3

  9

Sales outlet 3 to home

15

If Ella uses the automatic mileage method and works 240 days in 2015, what is her deduction for the year? Round your answer to the nearest dollar.

Explanation / Answer

Automatic mileage method or the Standard mileage method is the rate per mileage which IRS prescribes for every year. The standard mileage rate for the year 2015 for the miles driven for business purpose is 57.5 cents per mile

Now you can see Ella did not travel completely for business purposes. There are miles from Home to Regional office and Sales outlet 3 to home. These are called as commuting miles and are not deductible. Only the miles from Regional office to Sales Outlet and one outlet to another are considered as business miles.

Each day the miles are

Regional office to Sales Outlet 1 --- 13

Sales outlet 1 to Sales Outlet 2--- 11

Sales Outlet 2 to Sales Outlet 3 --- 9

Total business miles per day - --- 13 + 11 + 9 = 33 miles

In 2015 she works for 240 days. Total business miles in 2015 are 33 * 240 = 7920 miles

The standard mileage rate for 2015 is 57.5 cents per mile. Hence the deduction for the year is

7920 * 57.5 cents = $4,554.

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