Jackson uses his automobile 86% for business and during 2017 drove a total of 16
ID: 2508492 • Letter: J
Question
Jackson uses his automobile 86% for business and during 2017 drove a total of 16,400 business miles. Information regarding his car expenses is listed below.
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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A taxpayer has two choices in determining automobile expenses: the automatic mileage method and the actual cost method.
b. The automatic mileage method?
$
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Incorrect
c. What records must Jackson maintain?
Keeping a written or electronic log of miles driven, the dates the automobile was used, the location of travel, and the business purpose is enough evidence for the standard rate method . If the actual expense method is used, keeping copies of receipts, canceled checks, and bills in addition to a mileage log is sufficient. Records and logs should be kept contemporaneously (e.g., updated weekly or daily).
Explanation / Answer
Answer Part-1(a) Deduction as per Actual Cost Method Particular Amount Businees Parking $210 Auto insurance $2,100 Auto Club dues $252 Toll Road Charges $315 Oil Changes $336 Repair $231 Depercication Allowable $4,200 Total $7,644 Deduction(7644*86%) $6,574 Answer to Part b) Deduction in 2017, if uses Automatic mileage method : Total Business Miles $16,400.00 Standard Mileage Deduction 0.535 Standard Deduction (a) $8,774.00 (16400*0.535) Business Parking (b) $210.00 Auto Club Due (c ) $252.00 Total (a+b+c) $9,236.00
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