Jackson uses his automobile 74% for business and during 2015 drove a total of 22

Question

Jackson uses his automobile 74% for business and during 2015 drove a total of 22,000 business miles. Information regarding his car expenses is listed below.

What is Jackson's deduction in 2015 for the use of his car if he uses:

a. The actual cost method? Round your answer to nearest whole value.
$

b. The automatic mileage method?
$

Business parking $ 160 Auto insurance 1,600 Auto club dues (includes towing service) 192 Toll road charges (business-related) 240 Oil changes and engine tune-ups 256 Repairs 176 Depreciation allowable 3,200 Fines for traffic violations (incurred during business use) 320 Gasoline purchases 3,520

Explanation / Answer

Answer:

a. Actual Cost Method:

Total Deduction :

Rounding upto Whole Value: Total Deduction : $ 7255

b. => Automatic Mileage Method:

The IRS has increased the standard 2015 mileage rate to 57.5 cents per mile.

Hence the total mileage for business usage: 22000 * 74% = 16280 miles

Total automatic milage dedcution (Standard Deduction) : 16280 *57.5 cents per mile = $9361
Further dedutions Jackson can avail are as follows :

1. Parking Expenses (business related) : $ 160

2. Toll Expenses (business related): $ 240

Hence total dedcution : 9761 ( 9361+ 160+240)

EXPENSES ACTUAL EXPENSES BUSINESS RELATED EXPENSES ALLOWABLE Business parking 160.00 160.00 Auto insurance 1600.00 1184.00 74% Auto club dues (includes towing service) 192.00 142.08 74% Toll road charges (business-related) 240.00 240.00 Oil changes and engine tune-ups 256.00 189.44 74% Repairs 176.00 130.24 74% Depreciation allowable 3200.00 2368.00 74% Fines for traffic violations (incurred during business use) 320.00 236.80 74% Gasoline purchases 3520.00 2604.80 74% TOTAL EXPENSES ACTUAL EXPENSES BUSINESS RELATED EXPENSES ALLOWABLE Business parking 160.00 160.00 Auto insurance 1600.00 1184.00 74% Auto club dues (includes towing service) 192.00 142.08 74% Toll road charges (business-related) 240.00 240.00 Oil changes and engine tune-ups 256.00 189.44 74% Repairs 176.00 130.24 74% Depreciation allowable 3200.00 2368.00 74% Fines for traffic violations (incurred during business use) 320.00 236.80 74% Gasoline purchases 3520.00 2604.80 74% TOTAL 7255.36

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