Question

33. (4 points) Alberto works as an independent contractor in the clothing business as a buyer for several large retail chains. During 2019 he incurred the following expenses for transportation: Gas and oil $ 4,100 Repairs 450 Insurance 700 Ticket for speeding 180 License 350 Toll Road Fees (for business) 125 He purchased his car on November 16, 2018 for $32,000. During 2019 he drove the vehicle 28,000 miles in total including 22,400 miles for business. He had a very good year, so he wants to claim every possible deduction for his transportation. Be sure to show your work! If Alberto uses the Automatic Mileage Method, his transportation deduction is $ If Alberto uses the Actual Cost Method, his transportation deduction is $

Answer 1

Automatic Mileage Method
Alberto can take the Standard Mileage rate of 0.58 cents/mile for Car used for Business use in 2019 as deduction
Hence Car used for business	22400	Miles
Standard Mileage rate of 0.58 cents/mile	22500*.58	$12,992
Hence the Transportation Deduction using Automatic Mileage Method = $12,992
Actual Expenses Method
Total Mileage	28000	Miles
Used for Business	22400	Miles
Percentage of used in Business	22400/28000	80%
	Total Cost	% related to Business
Gas and Oil	$           4,100.00	$                            3,280.00	(4100*80%)
Repair	$              450.00	$                                360.00	(450*80%)
Insurance	$              700.00	$                                560.00	(700*80%)
Ticket and Speeding	$              180.00	$                                144.00	(180*80%)
License	$              350.00	$                                280.00	(350*80%)
Tool and Taxes (Business)	$              125.00	$                                125.00	100%
	$           5,905.00	$                            4,749.00
Hence the Transportation Deduction using Actual Expenses Method = $4,749