Question

Jackson, a self-employed taxpayer, uses his automobile 72% for business and during 2019 drove a total of 16,400 business miles. Information regarding his car expenses is listed below.

Business parking $ 220 Auto insurance 2,200 Auto club dues (includes towing service) 264 Toll road charges (business-related) 330 Oil changes and engine tune-ups 352 Repairs 242 Depreciation allowable 4,400 Fines for traffic violations (incurred during business use) 440 Gasoline purchases 4,840

What is Jackson's deduction in 2019 for the use of his car if he uses:

If required, round your answers to nearest dollar.

a. The actual cost method?
$

b. The automatic mileage method?
$

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  . If the   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).

Answer 1

SOLUTION :

Given that informaton ,

Jackson, a self-employed taxpayer,

In 2019 bussiness Jackson uses his automobile 72% for business.

a. The Actual Method

	PARTICULARS	AMOUNT ( $ )
ADD ADD	Auto Insurance Auto Club Dues( includes towing service) Oil Changes and engine tune ups Repairs Depreciation allowable Gasoline Purchases THE COST OF EXPENSES WHICH INCURRED ONLY 72% FOR BUSSINESS PURPOSE ONLY ( 12,298 *72% = 8,854.56 ) BUSSINESS PARKING TOLL AND CHARGES (bussiness related )	2200 264 352 242 4400 4840 8,855 220 330
	ACTUAL COST	9,405

NOTE : THE TRAFFIC PENALTIES OR FINES ARE NOT ELIGIBLE TO DEDUCT .

B.

THE AUTOMATIC MILAGE METHOD :

The purchases and recipts under AUTOMATIC MILAGE METHOD Individually consumption is no need for tracked for vechicle expense . By this method milage for the tax year is used to calculate the deduction . By this method Standard deductible rate allowed under this method .

In this 2019 58% of standard mileage rate was allowed

The deduction in 2019 for jackson is ,

= (16,400 miles *58 % ) + 220 + 330

= $9,512. + $550

=$10,062.

C.

Jackson must maintain that following records as follows :

here , if we applied that standard rate method  

1. Written or electronic log of miles driven by the car .
2. Dates on which the automobiles were used .
3. The [purpose of bussiness it was used .
4. andthe travelled location

When engaged with Actual cost method Jackson should keep that copies of recipts what he actually incurred during period , cancelled cheques and bills along with milage logs should carry weekly opr daily updated.

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