[The following information applies to the questions displayed below.] Ryan is se

Question

[The following information applies to the questions displayed below.]

Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $2,120 for gasoline on these trips. His depreciation on the car if he was using it fully for business purposes would be $5,700. During the year, he drove his car a total of 20,100 miles (a combination of business and personal travel). For 2017, the standard mileage rate has been set at 53.5 cents per mile. (Do not round intermediate calculations.

Problem 9-51

a. Ryan can provide written documentation of the business purpose for trips totaling 6,030 miles. What business expense amount can Ryan deduct (if any) for these trips?

b. Ryan estimates that he drove approximately 1,785 miles on business trips, but he can only provide written documentation of the business purpose for trips totaling 1,100 miles. What business expense amount can Ryan deduct (if any) for these trips?

Explanation / Answer

a. fuel cost for Ryan on business purpose trips = 6,030 * $.535 = $3,226.05

Depriciation counted for business purpose = (6,030 / 20,100) * $ 5,700

= 0.30 * $ 5,700 = $1,710

Total business expense amount Ryan deduct = $ 3,226.05 + $1,710 = $4,936.05

b.

fuel cost for Ryan on business purpose trips = 1,100 * $.535 = $588.50

Depriciation counted for business purpose = (1,100 / 20,100) * $ 5,700

= 0.0547 * $ 5,700 = $ 311.94

Total business expense amount Ryan deduct = $ 588.5 + $311.94 = $ 900.44

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