General Business and Employment Taxes Examples Flashcards
In January 2024, Mr. D, who is self-employed, purchased a new automobile, which he uses 100% for business. During 2024, he drove the car 14,000 miles. Mr. D also owns another automobile, which he uses occasionally for business but primarily for personal purposes. During 2024, he drove the second car 2,000 business miles. The second car is not fully depreciated. Assume both vehicles were driven uniformly throughout the year. What is the amount of Mr. D’s automobile expense deduction using the standard mileage rate?
$10,720
Automobile expenses pertaining to a trade or business are deductible under Sec. 162 as ordinary and necessary business expenses. The taxpayer may either deduct the portion of actual operating cost of the automobile attributed to business use or compute the deduction based on the standard mileage rate. For 2024, the standard mileage rate is $0.67 per mile for all miles of business use. Mr. D’s deduction for 2024 is $10,720 (16,000 miles × $0.67). The standard mileage rate is adjusted annually by the IRS to the extent warranted.
Willy, a self-employed laboratory consultant, flew to Buffalo where he stayed 3 days (2 days were on business). Airfare was $300, meals were $20 per day, and lodging was $20 per day. From Buffalo, Willy flew to Vancouver, Canada, where he spent 2 weeks on business and 1 week with relatives. Airfare to Vancouver and back home was $600. In Vancouver, food was $100 per week, and lodging was $200 per week. What is Willy’s deductible travel expense for the trip?