Question

Cassandra owns her own business and drives her van 15,300 miles a year for business and 5,100 miles a year for commuting and personal use. She purchases a new van in 2019 and wants to claim the largest tax deduction possible for business use. Cassandra's total auto expenses for 2019 are as follows: Gas, oil, and maintenance $5,540 Insurance 765 Interest on van loan 1,000 Depreciation 3,095 License 165 Parking fees and tolls (all business) 240 Determine Cassandra's 2019 deduction for business use of the van. Note: The standard mileage rate for 2019 is 58 cents per mile.

Answer 1

The largest tax deduction = $8,874 mileage method

Step-by-step explanation:

mileage method = 15300*0.58 =$8,874

Actual Expense = $5,540 + 765 + 3,095 +165 +240 + 1000 = $10,805

business use % = 15300/(15300+5100)

= 15300/20400 = 0.75

Actual expense = $10,805 * 0.75 = $8,103.75

If the interest expense on loan for the Van is considered as an expense for profit and loss section in calculating Net income then

ACTUAL EXPENSE = $10,805 - $1000 = $9,805 * 0.75= $7,353.75

nonetheless Mileage method gives the largest deduction