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?

Question

Business

Ingrid Gibson

6 June, 12:26

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?

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Julie Jennings · Answer 1

Explanation: First, you want to find the percentage of Arts car use for business. To get this percentage, we take Arts business miles and divide them with the total miles which is 15000 miles divided by 20000 miles. This gives us a percentage use of 0.75 which can also be translated to 75% usage. This means Art used 75% of his his vehicle towards his business.

Now to get Arts auto deduction, We take the percentage of his vehicles use and multiply that by his actual expenses. In this case 0.75 multiply by 10,000. 0.75*10,000 = 7,500. The answer is 7,500.

Remember, These Expenses could range from, auto repair, Gas, insurance. car washes etc.