Alfred uses his personal automobile in his business of selling party supplies to local businesses.He bought a new car in 2016 and drove it a total of 20,000 miles of which 2,000 miles were for commuting and other personal uses.Actual gas,oil,repairs,licensing,insurance,and depreciation totaled $11,000 for 2016.Actual parking expenses for business were $200.What is the maximum amount Alfred can deduct for 2016?

Question

Quizplus · Accepted Answer

To calculate the maximum amount Alfred can deduct for 2016, we need to follow these steps:

1. Calculate the business use percentage of Alfred's car:
Business use percentage = (Total miles - Personal miles) / Total miles
Business use percentage = (20,000 - 2,000) / 20,000
Business use percentage = 0.9 or 90%

2. Calculate the total deductible expenses:
Total deductible expenses = Actual expenses * Business use percentage
Total deductible expenses = ($11,000 + $200) * 0.9
Total deductible expenses = $10,100

Therefore, the maximum amount Alfred can deduct for 2016 is $10,100, which is option B.

Alfred Uses His Personal Automobile in His Business of Selling