Michelle is an employee who must use her personal

Reference no: EM13569944

Michelle is an employee who must use her personal automobile for employment-related business trips. During the current year, Michelle drives her car 60% for business use and incurs the following total expenses : Gas and oil $9000 Repairs $1400 Depreciation $4700 Insurance and license fees $1300 Parking and tolls business related $100 Total $16,500 Michelle drives 24,000 business miles during the current year and receives a reimbursement of 40 cents per mile from her employer.

Assume that an adequate accounting is made to Michelle's employer. A. states $5020 of the unreimbursed expenses are deductible from AGI, computed as follows: 24,000 miles unreimbursed at current IRS mileage rate which is 56.5 per mile, plus parking and tolls $100=1,346,100 total expenditures, yes? then minus reimbursement 24,000*.40 mile = 9600 and so 1,356,100-9600=1,346,500 deductible from AGI, yes? B. Under the actual cost method, $340 is deductible from AGI, computed as follows: Expenses excluding parking and tolls $29,000*60% business use=17,400 plus parking and tolls $100=17,500 minus employer's reimbursement amountI don't see what they'd reimbuse so I don't know the amount. Do you know? Right now I have a deduction amount of 17,500

Question 1 What amount is deductible if Michelle elects to use the standard mileage method?

Question 2 What amount is deductible if Michelle uses the actual cost method?

Question 3 Can taxpayers switch back and forth between the mileage and actual methods each year?

Reference no: EM13569944

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