In January 2022, Mr. D, who is self-employed, purchased a new automobile, which he uses 100% for business. During 2022, he drove the car 14,000 miles. Half of those miles were driven January through June. Mr. D also owns another automobile, which he uses occasionally for business but primarily for personal purposes. During 2022, he drove the second car 2,000 business miles. Again, half of those miles were driven January through June. The second car is not fully depreciated. What is the amount of Mr. D's automobile expense deduction using the standard mileage rate? O $7,840 O $8,470 O $8,960 O $9,680

In January 2022, Mr. D, who is self-employed, purchased a new automobile, which he uses 100% for business. During 2022, he drove the car 14,000 miles. Half of those miles were driven January through June. Mr. D also owns another automobile, which he uses occasionally for business but primarily for personal purposes. During 2022, he drove the second car 2,000 business miles. Again, half of those miles were driven January through June. The second car is not fully depreciated. What is the amount of Mr. D's automobile expense deduction using the standard mileage rate? O $7,840 O $8,470 O $8,960 O $9,680

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter9: Deductions: Employee And Self-employed-related Expenses

Section: Chapter Questions

Problem 4DQ

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Jed, age 55, is married with no children. During 2019, Jed had the following income and expense items: a. Three years ago, Jed loaned a friend 10,000 to help him purchase a new car. In June of the current year, Jed learned that his friend had been declared bankrupt and had left the country. There is no possibility that Jed will ever collect any of the 10,000. b. In April of last year, Jed purchased some stock for 5,000. In March of the current year, the company was declared bankrupt, and Jed was notified that his shares of stock were worthless. c. Several years ago Jed purchased some 1244 stock for 120,000, This year he sold the stock for 30,000. d. In July of this year, Jed sold some land that he had held for two years for 60,000. He had originally paid 42,000 for the land. e. Jed received 40,000 of interest income from State of Minnesota bonds. f. In September, Jeds home was damaged by an earthquake; Jeds county was declared a Federal disaster area by the President. Jeds basis in his home was 430,000. The value of the home immediately before the quake was 610,000. After the quake, the home was worth 540,000. Because earthquake damage was an exclusion on Jeds homeowners insurance policy, he received no insurance recovery. g. Jed received a salary of 80,000. h. Jed paid home mortgage interest of 14,000. i. If Jed files a joint return for 2019, determine his NOL. for the year.
Ray, 83, is a used car dealer. He lives in a rural community and operates the business out of his home. One room in his 6-room house is used exclusively for his business office. He parks the cars in his front yard, and when customers come along, they sit on the front porch and negotiate a sale price. The income statement for Rays auto business is as follows: If Rays home were rental property, the annual depreciation would be 2,900. The utilities and upkeep on the home cost Ray 6,400 for the year. Rays mortgage interest for the year is 2,400. When asked about the loan fees, Ray bitterly responds that Jim, the bank loan officer, charges him 10 percent of his gross profit on cars financed through the bank. Ray says, The money is under the table, and if I dont shell out the cash, Jim wont loan the money to my customers to buy my cars. Everybody goes to Jimhes got the cash. Write a letter to Ray explaining the proper treatment of this information on his tax return.
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