Problem 3-7Transportation (LO 3.3) Art is a self-employed installer of home entertainment systems, and he drives his car frequently to installation locations. Art drove his car 15,000 miles for business purposes and 20,000 miles in total. His actual expenses, including depreciation, for operating the auto are $10,000 since he had to have the car repaired several times. Art has always used the actual cost method in the past. How much is Art's deductible auto expense for the year?$

Problem 3-7Transportation (LO 3.3) Art is a self-employed installer of home entertainment systems, and he drives his car frequently to installation locations. Art drove his car 15,000 miles for business purposes and 20,000 miles in total. His actual expenses, including depreciation, for operating the auto are $10,000 since he had to have the car repaired several times. Art has always used the actual cost method in the past. How much is Art's deductible auto expense for the year?$

PFIN (with PFIN Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)

6th Edition

ISBN:9781337117005

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter5: Making Automobile And Housing Decisions

Section: Chapter Questions

Problem 4FPE

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Problem 3-7 (Algorithmic)Transportation (LO 3.3) Art is a self-employed installer of home entertainment systems, and he drives his car frequently to installation locations. Art drove his car 11,200 miles for business purposes and 21,500 miles in total. His actual expenses, including depreciation, for operating the auto are $12,800 since he had to have the car repaired several times. Art has always used the actual cost method in the past. How much is Art's deductible auto expense for the year? Round any interim division calculations to five decimal places. Round the final answer to the nearest dollar.$
Transportation (LO 3.3) Teresa is a self-employed civil engineer who uses her automobile for business. Teresa drove her automobile a total of 11,965 miles during 2020, of which 80% was business mileage. The actual cost of gasoline, oil, depreciation, repairs, and insurance for the year was $6,440. Teresa is eligible to use the actual or standard method. If required, round your answers to the nearest dollar. a. How much is Teresa's transportation deduction based on the standard mileage method?$fill in the blank f77e440a8016001_1 b. How much is Teresa's transportation deduction based on the actual cost method?$fill in the blank 4eb51bfe9039fc8_1 c. Which method should Teresa use to calculate her transportation deduction? Since the method yields the larger deduction, Teresa should use the method to determine her deduction.
Problem 3-25Hobby Losses (LO 3.12) Lew is a practicing CPA who decides to raise bonsai as a business. Lew engages in the activity and has the following revenue and expenses: Sales $ 5,000 Depreciation on greenhouse 10,000 Fertilizer, soil, pots 1,500 If an amount is zero, enter "0". a. Select either "Yes" or "No" to indicate which of the following are factors the IRS will consider when evaluating whether the activity is a business or a hobby. 1. Carrying on the activity in a businesslike manner. Yes 2. The time and effort put into the activity indicate you intend to make it profitable. Yes 3. Dependence on the income for the taxpayer's livelihood. Yes 4. Whether the losses are due to circumstances beyond control (or are normal in the startup phase of this type of business). Yes 5. Attempts to change methods of operation to improve profitability. Yes 6. The taxpayer or advisors have the knowledge needed to carry on the…
Problem 6-47 (LO. 3) Adelene, who lives in a winter resort area, rented her personal residence for 14 days while she was visiting Brussels. Rent income was $5,000. Related expenses for the year were as follows: Real property taxes $3,800 Mortgage interest 7,500 Utilities 3,700 Insurance 2,500 Repairs 2,100 Depreciation 15,000 If an answer is zero, enter "0". a. Determine how much of the rental income is reportable. $fill in the blank 1 b. Determine whether the expenses are deductible. Select "Yes" if deductible otherwise select "No". Depreciation Real property taxes Repairs Utilities Mortgage interest Insurance c. Determine the effect the rental activity has on Adelene's AGI. $fill in the blank 8
J2. Luke is a self-employed attorney. He maintains an office in his home that is exclusively dedicated to his work. The room occupies 10% of the floor space of the home. Luke incurs the following expenses: Electricity - $2,000 Wallpapering the office - $1,000 Re-roofing the house - $7,000 What is the amount of Luke's home office expense deduction?
Comprehensive Problem 3-1 Gordon Temper is a single taxpayer (birthdate July 1, 1986 and Social Security number 242-11-6767) who operates a food truck that specializes in food from South Africa. His business is named "Mobile Peri Peri" and although the truck moves around quite a bit, he generally parks it in an office park where he maintains an office and a supply of inventory. The business address is 150 Erie Street, Laramie, WY 82070. The principal business code is 722300. Gordon's food truck business is fairly new, so he also works part-time as a cook at a steak house restaurant in Laramie. His 2023 Form W-2 follows (see separate tab). Gordon provided the following financial information related to Mobile Peri Peri: Revenues $80,000 Beginning Inventory 5,600 Purchases 43,000 Ending inventory 5,800 Truck rental 24,000 Office rental 8,600 Advertising 700 Insurance 3,000 Food license 500 Uniforms 200 Dues 100 Travel 1,600 Office expense 400 Mobile Peri Peri uses the cash method of…
Becker 1. In the current year, Barlow moved from Chicago to Miami to start a new job, incurring costs of $1,200 to move household goods and $2,500 in temporary living expenses. Barlow was not reimbursed for any of these expenses. What amount should Barlow deduct as an itemized deduction for moving expense? a. $0 b. $1,200 c. $2,500 d. $3,700 4
14. Carla is not happy with her present job, she resigned and started her own business. The business requires her to travel so she used her car for the purpose. Assume that A started her business on April 1 and that the uses the car for business 70% of the time. Assuming total expenses for the year for the use of the car is P300,000, the deductible expense is:* a. 210,000 b. 225,000 c. 300,000 d. 157,500
Problem 6-46 (LO. 3) Piper owns a vacation cabin in the Tennessee mountains. Without considering the cabin, she has gross income of $65,000. During the year, she rents the cabin for two weeks for $2,500 and uses it herself for four weeks. The total expenses for the year are $10,000 mortgage interest; $1,500 property tax; $2,000 utilities, insurance, and maintenance; and $3,200 depreciation. If an amount is zero, enter "0". a. What effect does the rental of the vacation cabin have on Piper's AGI? Piper reports rental income of $fill in the blank 24e4ed0ad044019_1 and rental expenses of $fill in the blank 24e4ed0ad044019_2 for AGI. b. What expenses can Piper deduct, and how are they classified (i.e., for or from AGI)? Note: Assume that she itemizes her deductions. a. Utilities $fill in the blank b9bf8ef99f9900f_1 b. Insurance $fill in the blank b9bf8ef99f9900f_3 c. Property Taxes $fill in the blank b9bf8ef99f9900f_5 d. Mortgage interest $fill…
Problem 9-22 (LO. 2) Jackson, a self-employed taxpayer, uses his automobile 90% for business and during 2020 drove a total of 14,000 business miles. Information regarding his car expenses is listed below. Business parking $ 140 Auto insurance 1,300 Auto club dues (includes towing service) 180 Toll road charges (business-related) 200 Oil changes and engine tune-ups 210 Repairs 160 Depreciation allowable 2,850 Fines for traffic violations (incurred during business use) 320 Gasoline purchases 2,800 What is Jackson's deduction in 2020 for the use of his car if he uses: a. The actual cost method?$fill in the blank 1170da0eafdd00f_1 b. The automatic mileage method?$fill in the blank ff3c7103f04903b_1
Problem 9-33 (LO. 5) Melanie is employed full-time as an accountant for a national hardware chain. She recently started a private consulting practice, which provides tax advice and financial planning to the general public. For this purpose, she maintains an office in her home. Expenses relating to her home for 2020 are as follows: Real property taxes $3,600 Interest on home mortgage 3,800 Operating expenses of home 900 Melanie's residence cost $350,000 (excluding land) and has living space of 2,000 square feet, of which 20% (400 square feet) is devoted to business. The office was placed in service in February 2019, and under the Regular Method, Melanie had an unused office in the home deduction of $800 for 2019. Assume there is sufficient net income from her consulting practice. Click here to access the depreciation table. Round deprecation to the nearest dollar. a. What amount can Melanie claim this year for her office in the home deduction under the Regular…
Problem 9-33 (LO. 5) Melanie is employed full-time as an accountant for a national hardware chain. She recently started a private consulting practice, which provides tax advice and financial planning to the general public. For this purpose, she maintains an office in her home. Expenses relating to her home for 2020 are as follows: Real property taxes $3,600 Interest on home mortgage 3,800 Operating expenses of home 900 Melanie's residence cost $350,000 (excluding land) and has living space of 2,000 square feet, of which 20% (400 square feet) is devoted to business. The office was placed in service in February 2019, and under the Regular Method, Melanie had an unused office in the home deduction of $800 for 2019. Assume there is sufficient net income from her consulting practice. depreciation table below. Round deprecation to the nearest dollar. 8-7cCost Recovery Tables Summary of Tables Exhibit 8.3 Regular MACRS table for personalty. Depreciation…