Question

9 Required information The following information applies to the questions displayed below. Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $2,000 for gasoline on these trips. His depreciation on the car if he was using it fully for business purposes would be $3,600. During the year, he drove his car a total of 17,900 miles (a combination of business and personal travel). (Do not round intermediate calculations. Round your final answer to the nearest dollar amount.) b. Ryan estimates that he drove approximately 1,855 miles on business trips, but he can only provide written documentation of the business purpose for trips totaling 920 miles. What business expense amount can Ryan deduct (if any) for these trips? Maximum deductible amount

Answer 1

Business expense amount Ryan can deduct on the trips :

Total miles driven(business +personal)=17,900 miles

Total miles driven for business purpose(approximately)=1,855 miles

Miles for which Ryan can provide documentation/supporting valid=920 miles

So Ryan would be eligible to claim deduction only for the 920 miles driven for which he has valid supporting.

Expenses incurred:

Gasoline expenses on the trip= $2,000

Depreciation on the car(estimated, assume it is straight-line)= $3,600

Total expenses= $2,000+$3,600= $5,600

Business expense that can be claimed as deduction= $5,600*(920/17900miles)= $287.82

Therefore the expense that Ryan can claim as deduction is $287.