Question

Michelle operates a food truck. Indicate the amount (if any) that she can deduct as an ordinary and necessary business deduction in each of the following situations.

a. Michelle moves her food truck between various locations on a daily rotation. Last week, Michelle was stopped for speeding. She paid a fine of $170 for speeding, including $125 for legal advice in connection with the ticket.
Deductible Amount =__________
b. Michelle paid $795 to reserve a parking place for her food truck for the fall football season outside the local football arena. Michelle also paid $140 for tickets to a game for her children.
Deductible Amount =_____________
c. Michelle provided a candidate with free advertising painted on her truck during the candidate’s campaign for city council. Michelle paid $680 to have the ad prepared and an additional $380 to have the ad removed from the truck after the candidate lost the election.
Deductible Amount=___________

Answer 1

A. Deductible Amount = $125

This is because legal advice is fully deductible while there are no deductions available for fines.

B. Deductible Amount = $ 795

This is because the amount used in reserving parking is fully deductible, while the amount for ticket for her children is personal and hence doesnt fall under deductibles.

C. Deductible Amounts = $0

For all and any political purpose, deductibles doesnt apply. Whether it is in form of cash or kind. Hence, there is no deductions in this case.