Question

Tax Accounting

a)Rodney works as a self-employed salesperson. His job requires that he spend most of his time outside the office calling on customers. In addition, to supplement his income, he works 1 night a week and on weekends as a waiter at an exclusive seafood restaurant in the city. During 2019, he keeps the following records of his mileage: Miles Home to office 850 Office to home 425 Office to restaurant 300 Restaurant to home 1,200 Home to restaurant 725 Office to customers' offices 7,100 Customers' offices to restaurant 400 Total miles 11,000 If he uses the standard mileage rate, what amount can he deduct as a business automobile expense? b)Rodney pays $190 to fly from Santa Fe to Denver. he spends 3 days finalizing a contract with the management of El Rancho Restaurant Group for delivery of green chili to all of its restaurants for the upcoming year. To celebrate, he stayed in Denver for 2 more days to attend the National Western Stock Show. Hotel costs are $135 per night and meals are $38 per day. How much can Rodney deduct as business expenses from his trip?

Answer 1

a) Ans- Out of 11,000 miles only 7,100 miles can be considered for deduction ie, from office to customer's office. All the other miles covered are for his personal purpose.

Therefore amount he can deduct as business automobile expense is (7100*58 cents)=411800 cents ie, $4118.

b) Deduction as business expense for Rooney-

Flight cost from Santa Fee to Denver(190*2)- $380

Hotel costs($135*3=$405) - $405

Meals($38*3=$114*50%) - $57

Total - $842   

He spent 3 days for business purpose so only 3 days expenses can be claimed for deduction.As per IRS guidelines only 50% of the meal cost is deductible. Since only 1 way flight cost is given it is assumed that the return flight cost is also $190.

So, the total deduction that can be claimed is $842.