Michelle is an employee who must use her personal automobile for employment-related business trips. During 2013, Michelle
Question:
Michelle is an employee who must use her personal automobile for employment-related business trips. During 2013, Michelle drives her car 60% for business use and incurs the following total expenses (100% use of car):
Gas and oil ...............................................$ 9,000
Repairs ................................................... 1,400
Depreciation ............................................. 4,700
Insurance and license fees ............................. 1,300
Parking and tolls (business related) .................. 100
Total...................................................... $16,500
Michelle drives her car a total of 40,000 miles (24,000 business miles) during 2013 and receives a reimbursement of 40 cents per business mile from her employer. Assume that an adequate accounting is made to Michelle's employer.
a. What amount is deductible (before the 2% nondeductible floor) if Michelle uses the standard mileage method?
b. What amount is deductible (before the 2% nondeductible floor) if Michelle uses the actual cost method?
c. Can taxpayers switch back and forth between the mileage and actual methods each year?
Step by Step Answer:
Federal Taxation 2014 Comprehensive
ISBN: 9780133438598
27th Edition
Authors: Timothy J. Rupert, Thomas R. Pope, Kenneth E. Anderson