Jordan, an employee, drove his auto 20,000 miles this year, 15,000 to meetings with clients and 5,000 for commuting and personal use. The cost of operating the auto for the year was as follows: Jordan submitted appropriate reports to his employer, and the employer paid a reimbursement of $ .50 per mile. Jordan has used the actual cost method in the past. Jordan's AGI is $50,000. What is Jordan's deduction for the use of the auto after application of all relevant limitations?

Question

Jordan, an employee, drove his auto 20,000 miles this year, 15,000 to meetings with clients and 5,000 for commuting and personal use. The cost of operating the auto for the year was as follows:  Jordan submitted appropriate reports to his employer, and the employer paid a reimbursement of $ .50 per mile. Jordan has used the actual cost method in the past. Jordan's AGI is $50,000. What is Jordan's deduction for the use of the auto after application of all relevant limitations?

Quizplus · Accepted Answer

($7,000 + $1,000 + $4,000) × 15,000/20,000 = $9,000. $9,000 - (15,000 × .50) - (2% × $50,000) = $500. Jordan is an employee so qualifying expenses after reduction for reimbursement are limited by the 2% of AGI floor.

Jordan, an Employee, Drove His Auto 20,000 Miles This Year