Last year, Troy operated an insurance sales business and spent a significant amount of time traveling....
| Last year, Troy operated an insurance sales business and spent a significant amount of time traveling. He purchased a vehicle to be used 100% for business. During the year, Troy spent $2,500 on gas and $250 on repairs. He computed $10,000 of accelerated depreciation on the vehicle. Troy's miles driven during the year multiplied by the standard business mileage rate equaled $5,000. What is Troy's deductible automobile expense using the actual cost method? |
Homework Answers
Under Actual Cost Method:
Expense allowed to deduct are:
Gas & Oil, Repairs, Vehicle Maintenance, Tire Replacement, License, Insurance & Registration fee and Depreciation & Lease payment if any.
% allowed to deduct:
Based on the % of the vehicle used for business.
In the said example, the vehicle is used in business for 100%. Hence consider the allowable expense for deduction in full (i.e.)
Gas = $ 2500
Repairs = $ 250
Depreciation = $ 10,000
Total = $ 12,750
Thus, total allowable expense for deduction using actual cost method = $ 12,750 *100% = $ 12,750
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