Paul is a self-employed investment adviser who uses his automobile for business. Paul drove his automobile a total of 20,000 miles during 2019; 75 percent was business mileage. The actual cost of gasoline, oil, depreciation, repairs, and insurance for the year was $6,200.   a. How much is Paul's transportation deduction based on the standard mileage method?       b. How much is Paul's transportation deduction based on the actual cost method?       c. ​ Which method should Paul use to calculate his transportation deduction, assuming he used the standard mileage method in the prior tax year? Why?

Income Tax Fundamentals 2020
38th Edition
ISBN:9780357391129
Author:WHITTENBURG
Publisher:WHITTENBURG
Chapter3: Business Income And Expenses
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Problem 6P: Teresa is a civil engineer who uses her automobile for business. Teresa drove her automobile a total...
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. Paul is a self-employed investment adviser who uses his automobile for business. Paul drove his automobile a total of 20,000 miles during 2019; 75 percent was business mileage. The actual cost of gasoline, oil, depreciation, repairs, and insurance for the year was $6,200.

 

a.

How much is Paul's transportation deduction based on the standard mileage method?

 

 

 

b.

How much is Paul's transportation deduction based on the actual cost method?

 

 

 

c.

Which method should Paul use to calculate his transportation deduction, assuming he used the standard mileage method in the prior tax year? Why?

 

 

 

d.

Where should he deduct the transportation expense on his current year tax return?

 

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