Question

	Tax - Intermediate Vehicle Expense [2019] _
19	Chris Cruz has decided to start a taxi company and has purchased 7 passenger vehicles. He has hired 15 drivers so that he can keep all of the vehicles on the road at all times. What are his options for vehicle expenses?
	A.- Chris can use SMR for up to four of the vehicles, but he will have to use actual expenses for the other three.
	B.- Chris must use actual expenses for all of the vehicles.
	C.- Chris can make a different decision for each vehicle.
	D.- Chris will have use SMR in the first year, so that he can choose SMR or actual expenses in future years.
20	Josh uses his 2014 Dodge Caravan in his landscaping business. He also has a rental property about 100 miles away that he goes to once a month. He uses actual expenses. What forms will report expenses for the van?
	A.- Schedule C and Form 4562.
	B.- Schedule E and Form 4562.
	C.- Schedule C, Schedule E, and Form 4562.
	D.- Form 4562.

Answer 1

sol:

19)

In the given case Chris Cruz started a Taxi company with purchasing 7 passenger vehicle. It means Chriz Cruz star a new segment of business and it believes that he has not idea about SMR and Actual Expenses then it is a good idea to use SMR for first year use the car for business. Choosing this route leaves all option open for later years to Chris Cruz.

Hence option (D) shall be best option for Chris Cruz beacuse if he opt SMR in first Year then he can choose SMR or actual expenses in future years as per his benefits.

However this rule does not applicable in case of leased vehicles. In leased vehicle if use SMR for the first year then it must used for entire rest of the lease period.

20)

Solution: schedule c, schedule e, and form 4562

Explanation: Form-4562 will be used to report depreciation; Schedule E for reporting the "passive" income; and self-employment business income will be reported on Schedule C

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