Question

Car and Truck Expense. (Obj. 3)Keith is self-employed. During 2018, he drove his car a total of 9,169 miles for work. He drove a total of 21,468 miles during the year. His car expenses for the year were as follows.

Business parking and tolls 360

Depreciation 1475

Gas 2557

Insurance 940

License tags 50

Repairs and maintenance 52

5434

a. Compute Keith’s car expense deduction using the standard mileage rate.

b. Compute Keith’s car expense deduction using the actual cost method.

Answer 1

a	Keith's car expense deduction using the standard mileage rate.
	Under the standard mileage rate method, one can deduct car expenses based on mileage driven for
	business purpose
	Standard mileage rate per business mile	$0.545
	Mileage driven for business purpose	9,169
	Deduction based on mileage	$4,997
	Parking fees and tolls	$360
	Total tax deduction for car expenses	$5,357
b	Keith's car expense deduction using the actual cost method
	Under actual cost method, actual expenses are deducted based on percentage usage for business
	purpose
	Total miles driven	21468
	Miles driven for business purpose	9169
	Percentage usage for business purpose	43%
	Actual expenses
	Parking fees and tolls	$360
	Depreciation	$1,475
	Gas	$2,557
	Insurance	$940
	Licence tag	$50
	Repair and maintenance	$52
	Total	$5,434
	Percentage usage for business purpose	43%
	Deduction based on actual expense	$2,321

Parking fee and toll expenses are allowed under standard mileage rate method