Penny owns her own business and drives her car 12,000 miles a year for business and 3,000 miles a year for commuting and personal use. She wants to claim the largest tax deduction possible for business use of her car. Her total expenses related to her auto for 2018 are as follows:
?
$$\begin{array} { l r }
\text { Gas, oil, and maintenance } & \$ 4,050 \
\text { Insurance } & 720 \
\text { Interest on car loan } & 500 \
\text { Depreciation } & 2,960 \
\text { License } & 80 \
\text { Parking fees and tolls (100\% business) } & 130
\end{array}$$
Penny's total deduction for business use of the auto in 2018 is:

Question

Penny owns her own business and drives her car 12,000 miles a year for business and 3,000 miles a year for commuting and personal use. She wants to claim the largest tax deduction possible for business use of her car. Her total expenses related to her auto for 2018 are as follows:
?
$$\begin{array} { l r } 
\text { Gas, oil, and maintenance } & \$ 4,050 \
\text { Insurance } & 720 \
\text { Interest on car loan } & 500 \
\text { Depreciation } & 2,960 \
\text { License } & 80 \
\text { Parking fees and tolls (100\% business) } & 130
\end{array}$$
Penny's total deduction for business use of the auto in 2018 is:

Quizplus · Accepted Answer

To calculate the deduction, we first determine the business use percentage: 12,000 business miles / 15,000 total miles = 80%. Then, apply this percentage to the total expenses (excluding parking fees and tolls, which are 100% deductible): $4,050 + $720 + $500 + $2,960 + $80 = $8,310. 80% of $8,310 is $6,648. Add the parking fees and tolls ($130) to get $6,778. However, the correct choice is $7,070, which suggests a possible error in the options or calculations.

Penny Owns Her Own Business and Drives Her Car 12,000