Philip, a self-employed salesman, uses his Chevy to travel to potential buyers from his office. During 2020, he drove the car 5,000 miles for business, 3,000 commute miles and 12,000 personal miles. He paid $10,000 two years ago for the car which can be depreciated over 5 years. He has never depreciated the car using any other method than the straight-line method. In the past he has always used the standard mileage rate for car expenses. If his total gasoline and maintenance costs for the car (business and personal) were $2,000, how much may Philip deduct using the standard mileage rate for 2020? How much may he deduct using the actual cost method.

Philip, a self-employed salesman, uses his Chevy to travel to potential buyers from his office. During 2020, he drove the car 5,000 miles for business, 3,000 commute miles and 12,000 personal miles. He paid $10,000 two years ago for the car which can be depreciated over 5 years. He has never depreciated the car using any other method than the straight-line method. In the past he has always used the standard mileage rate for car expenses. If his total gasoline and maintenance costs for the car (business and personal) were $2,000, how much may Philip deduct using the standard mileage rate for 2020? How much may he deduct using the actual cost method.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter4: Gross Income

Section: Chapter Questions

Problem 7P

See similar textbooks

Similar questions

Roberta was involved in an automobile accident in 2021. Her car was used 60% for business and 40% for personal use. The car had originally cost $40,000. At the time of the accident, the car was worth $20,000 and Alicia had taken $8,000 of depreciation. The car was totally destroyed and Roberta had let her car insurance expire. If her AGI is $50,000 (before considering the loss), determine her AGI and itemized deduction for the casualty loss. a.$50,000; $-0-. b.$34,000; $4,500. c.$26,000; $5,700. d.$34,000; $-0-.
Ryan is self-employed. This year Ryan used his personal auto for several long business trips. He paid $1,850 for gasoline on these trips. Ryan estimates that he drove approximately 2,220 miles on business trips, but he can only provide written documentation of the business purpose for trips totaling 1,400 miles. His depreciation on the car if he was using it fully for business purposes would be $3,000. During the year, he drove his car a total of 18,500 miles (a combination of business and personal travel). What business expense amount can Ryan deduct (if any) for these trips? (Do not found intermediate calculations. Round your final answers to the nearest whole dollar amount.) Maximum deductible amount
Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $1,500 for gasoline on these trips. His depreciation on the car if he was using it fully for business purposes would be $3,000. During the year, he drove his car a total of 12,000 miles (a combination of business and personal travel). Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount. b. Ryan estimates that he drove approximately 1,300 miles on business trips, but he can only provide written documentation of the business purpose for trips totaling 820 miles. What business expense amount can Ryan deduct (if any) for these trips? Maximum deductible amount
Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $2,400 for gasoline on these trips. His depreciation on the car if he was using it fully for business purposes would be $3,300. During the year, he drove his car a total of 19,800 miles (a combination of business and personal travel). (Round your final answers to the nearest whole dollar amount.) a. Ryan can provide written documentation of the business purpose for trips totaling 3,960 miles. What business expense amount can Ryan deduct (if any) for these trips?
Will purchased a home for $350,000 five years ago. He did significant renovations and additions increasing the value to $425,000. He forgot to update his original policy limits of $280,000. He incurred a $100,000 loss by fire. He has a $2,500 deductible. How much will he be responsible for after accounting for the amount his insurer will pay? In other words, how much of the loss will his insurer not pay?
Curt is self-employed as a real estate salesman and drives his car frequently to take clients to see homes for sale. Curt drove his car 20,000 miles for business purposes and 25,000 miles in total. His actual expenses for operating the auto including depreciation are $10,000 since he drove it so much during the year. Curt has used the actual cost method since he started his business in 2015. How much is Curt’s deductible auto expense for the year?
Ryan is self employed. This year Ryan used his personal auto for several long business trips. Ryan paid $1,850 for gasoline on these trips. His depreciation on the car if he was using it fully for business purposes would be $3,000. During the year, he drove his car a total of 14,600 miles. Ryan estimates that he drove approximately 1,560 miles on business trips, but he can only provide written documentation of the business purpose for trips totaling 1,400 miles. What business expense amount can Ryan deduct (if any) for these trips?
Jos is a Sales Manager. He uses his own car to travel to various locations. He acquired the car on 1 October 2021 for $60,000. The acquisition cost was funded entirely by a loan at an interest rate of 15%. He has determined that the depreciation deduction on the car would be $2,300 for the year. In addition, Jos incurred the following expenses during the year: Registration and insurance = $2,000; Repairs and maintenance = $1,000; and Oil and fuel costs = $1,500. For the period 1 October 2021 to 30 June 2022, Jos estimates that the car travelled 15,000 kilometres, 12,000 of which were for business purposes. You may assume that Jos has maintained all necessary records and a logbook. Required: Calculate Jos's deduction for car expenses under the two methods (cent per kilometre rate 0.72 and logbook) in Div 28 of Income Tax Assessment Act 1997. Assume that depreciation has been adjusted for part-year use and the impact of the car limit
On July 15, 2018, H.P. purchases a personal computer for his home. The computer cost $4,000. H.P. uses the computer 60 percent of the time in his business, 15 percent of the time for managing his investments and the remaining 25 percent of the time for various personal uses. Calculate H.P.'s maximum depreciation deduction for 2018 for the computer, assuming he does not make the election to expense or take bonus depreciation.
This year, Amy purchased $4,200 of equipment for use in her business. However, the machine was damaged in a traffic accident while Amy was transporting the equipment to her business. Note that because Amy did not place the equipment into service during the year, she does not claim any depreciation or cost recovery expense for the equipment. a. After the accident, Amy had the choice of repairing the equipment for $2,690 or selling the equipment to a junk shop for $475. Amy sold the equipment. What amount can Amy deduct for the loss of the equipment? Deductible amount
Frank operates a construction business in Dallas, Texas. On May 1, 2022, Frank purchased a warehouse for his business. The warehouse cost $500,000. In June 2022, Frank purchased some new equipment for the business. The equipment cost $200,000. Frank took $8,000 of depreciation on the warehouse in 2022 and $13,000 in 2023. Frank took $40,000 of depreciation on the equipment in 2022 and $80,000 in 2023. Frank decided to sell the warehouse and equipment so he could upgrade the business. He sold the warehouse for $550,000 and the equipment for $220,000 on December 31, 2023. What result to Frank?
Jed is married with no children. Both he and his wife are age 55. During 2022, Jed had the following income and expense items: a. Three years ago, Jed loaned a friend $10,000 to help him purchase a new car. In June of the current year, Jed learned that his friend had been declared bankrupt and had left the country. There is no possibility that Jed will ever collect any of the $10,000. b. In April 2020, Jed purchased some stock for $5,000. In March 2022, the company was declared bankrupt, and Jed was notified that his shares of stock were worthless. c. Several years ago, Jed purchased some § 1244 stock for $120,000. This year, he sold the stock for $30,000. d. In July of this year, Jed sold some land that he had held for two years for $60,000. He had originally paid $42,000 for the land. e. Jed received $40,000 of interest income from State of Minnesota bonds. f. In September, Jed's home was damaged by an earthquake; Jed's county was declared a Federal disaster area by the President.…