J.B., a self-employed taxpayer, acquired a car this year and uses the standard mileage method to compute her deduction for automobile expenses.During the year, J.B.drove 50,000 miles: 40,000 for business and 10,000 for personal purposes.Other expenses related to the car that she has brought to her tax advisor's attention include insurance of $400, parking on business calls of $50, and interest on debt incurred to purchase the car of $1,000.What is J.B.'s deduction for automobile expenses (assume the mileage rate is .50 cents per mile for all units)?

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J.B.'s deduction for automobile expenses using the standard mileage rate of $.50 per mile for 40,000 business miles is $20,000 (40,000 miles x $.50). Additionally, parking fees on business calls of $50 are deductible, making the total deduction $20,050. Insurance and interest on the car loan are not deductible when using the standard mileage rate.

JB, a Self-Employed Taxpayer, Acquired a Car This Year and Uses