Final answer:
The deductible business expense for assets used for both business and personal purposes is determined based on the percentage of the asset's use for business purposes. This is known as the business use percentage. Accurate records and documentation are important to support the business use percentage and ensure compliance with tax regulations.
Step-by-step explanation:
The deductible business expense for assets used for both business and personal purposes is determined based on the percentage of the asset's use for business purposes. This is known as the business use percentage. To calculate the business use percentage, you need to determine the total usage of the asset for both business and personal purposes.
For example, if a car is used 60% of the time for business purposes and 40% of the time for personal purposes, the business use percentage would be 60%.
Once you have the business use percentage, you can apply it to the total expense of the asset to determine the deductible business expense. For instance, if the total expense of the car for a year is $10,000, the deductible business expense would be $6,000 (60% of $10,000).
It's important to keep accurate records to support the business use percentage and to ensure compliance with tax regulations. This can include mileage logs, time logs, or other documentation that shows the business use of the asset.