Question

9a.

Ryan is self-employed. This year Ryan used his personal auto for several long business trips. Ryan paid $1,800 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 20,300 miles (a combination of business and personal travel). (Do not round intermediate calculations. Round your final answer to the nearest dollar amount.)

a. Ryan can provide written documentation of the business purpose for trips totaling 4,060 miles. What business expense amount can Ryan deduct (if any) for these trips?

b. Ryan estimates that he drove approximately 1,725 miles on business trips, but he can only provide written documentation of the business purpose for trips totaling 1,140 miles. What business expense amount can Ryan deduct (if any) for these trips?

Answer 1

Ryan a. Ryan can provide written documentation of the business purpose for trips totaling 4,060 miles. What business expense amount can Ryan deduct (if any) for these trips? $1800 + $600 (3000*[4060/20300]} = $2,400 or $2,355 {.58*4,060} b. Ryan estimates that he drove approximately 1,725 miles on business trips, but he can only provide written documentation of the business purpose for trips totaling 1,140 miles. What business expense amount can Ryan deduct (if any) for these trips? Ryan is allowed to deduct the cost of using his personal auto in his business activities only if he can substantiate the business use. If he has records to substantiate the business use, Ryan can claim the direct cost of these trips including depreciation on the auto (for the business portion of the total mileage). Ryan's total expense deduction would consist of depreciation and expenses calculated as follows:((1,140 / 20,300) < $3,000] + [(1,140 / 1,725) < $1,800] = $168 + $1,190 = $1,358. Alternatively, Ryan can claim a standard mileage rate. Ryan can only substantiate 1,140 miles, and based on the standard mileage rate of 580 per mile, he can deduct $661 (i.e., 1,140 x 0.58). Standard mileage rate for 2019 is 58C.